May 21, 2022

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Do you think banks will raise the mortgage rate more than the deposit rate - E24

Do you think banks will raise the mortgage rate more than the deposit rate – E24

On average, major Norwegian banks have raised mortgage rates more than deposit rates in the past six months, according to Renteradar, which believes the differences will increase in the future.

Sindre Noss at Renteradar helping consumers compare mortgage rates.
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This week, several major Norwegian banks announced that they will raise mortgage rates by 0.25 percentage points with Norges Bank raising its key rate.

But when it comes to raising deposit rates, many banks are holding back. The deposit rate is what banks pay their customers to “borrow” their savings.

– the interest rate on the salary account that they did not raise at all; Where the deposit rate is almost zero. In a savings account for regular customers, the interest rate has only increased slightly so far, says Sindre Noss at Renteradar, a service for consumers to compare mortgage interest rates.

On average, banks have raised deposit rates lower than their lending rates in the past six months, according to Renteradar.

The differences will increase

Noss thinks this trend will continue when interest rates go up even more now: The Norges Bank has announced seven more rate hikes by the end of 2023.

It will be interesting to see what they do in the future. I’m sure the banks will raise mortgage rates more than deposit rates. With that said, banks are increasing interest margins, and thus profits, says Noss.

Bank profits are really good. He adds that they provided good numbers throughout the Corona crisis, and now they see an opportunity to increase this number even more.

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Developments in the price list of DNB for mortgages and deposits:

In the chart above, Renteradar is based on the regular list price for customers with 3 million in mortgages (repaying loans), 75 percent loan-to-value, over 35 years, and the regular list price for customers with NOK 250,000 in an account. to provide. The new DNB price list for new mortgage customers will appear on April 4th and is therefore not included in the chart.

a lot of money to get

From now on, there will be increasing and significant differences in the rates of deposits that banks make on their savings accounts, Noss believes.

He believes that existing banks will continue to decline and increase profit margins, while smaller banks that need deposits will increase their savings rates in line with the Norges Bank.

On Tuesday, the bank announced a 0.25 percentage point increase in the mortgage rate and the interest rate on savings accounts and BSU deposits by up to 0.20 percentage points.

– There could be a difference of 1.5 percent, and maybe even 2 percent in 2023. It’s possible here to save a lot of money for those who have a lot of money in a savings account, he says.

This usually applies to seniors who have a lot of savings, who do not want to take risks and therefore have money in a savings account and not in the fund.

It’s very easy to set up a savings account at another bank, he says, but it’s “surprisingly far away” for many customers.

The bank raises the mortgage rate by more than the deposit rate

The latest report on rate increases is Sbanken, which said on Tuesday it would raise the rate by 0.25 percentage points on all mortgages, while the rate on savings accounts and BSU deposits would be raised by up to 0.20 percentage points in effect from 11 Mayo.

Why are interest rates higher on loans than on deposits?

– We lowered the mortgage rate many times without doing the same with deposits. “Every time we adjust interest rates, we do a comprehensive review, making adjustments based on ratings of both individual and aggregate products,” Sbanken Managing Director √ėyvind Thomassen says.