May 22, 2022

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Sparebank 1 Nord-Norge raises mortgage rate: - Our first exit was somewhat of a coincidence

Sparebank 1 Nord-Norge raises mortgage rate: – Our first exit was somewhat of a coincidence

– Our assessment was that we don’t have control over it. The rate hike was more likely to be with us, because we were going out first and it was somewhat random, says Leif B. Sparebank 1 Nord-Norge CEO Ulrichsen to DN.

On Thursday, the Norges Bank decided to raise its key interest rate by 0.25 percentage point. Thus, the key policy rate is now 0.75 percent. Moreover, the central bank indicated that interest rates will rise further.

Norges’ interest rate trajectory, which is the central bank’s projections of how interest rates will develop in the future, means interest rates will be raised seven more times by the end of 2023.

On Friday, Sparebank 1 Nord-Norge announced that it is following the central bank – the lending rate will be raised by as much as 0.25 percentage points. Thus, the bank is the first to raise interest rates after the Norges Bank hike.

The new interest rates are effective from Monday, March 28th on new loans, and effective May 6th on existing loans.

The bank’s website states that the interest rate on a new mortgage is now 2.34 percent, while the rate on a mortgage for youth under the age of 34 is 2.19 percent.

It is not specified what Sparebank 1 Nord-Norge will do with the deposit rate.

– We expect the deposit rate to be set over the weekend, says Ulriksen.

The prime policy rate is the interest rate that banks receive on deposits with the Bank of Norway. This means that the key policy rate, and the expectations of developments in this interest rate, affect the interbank interest rates and the level of interest rate offered by the banks to their customers.

When Norges Bank makes changes to its prime rate, it usually doesn’t take long before the banks also adjust their deposit and lending rates. So there is reason to expect more banks to raise interest rates in the coming days.

high activity

On Thursday, the Bank of Norway justified raising interest rates on the grounds that activity in the Norwegian economy has increased after the removal of infection control measures this winter. At the same time, the employment rate has increased further, and the capacity utilization in the economy appears to be higher than what Norges considers a normal level.

At the same time, the Central Bank stressed that the war in Ukraine creates uncertainty about future economic development, but there are still possibilities that the recovery in the Norwegian economy will continue.

Central Bank Governor Ida Waldenbach indicated that interest rates could be raised more quickly if there were prospects for more high inflation.

Big slit

Marie Mamre, a housing researcher at NMBU, believes that the announced interest rate jumps will affect the portfolio of many.

Many young and first-time buyers are usually about the maximum limits allowed by mortgage regulations before today’s rate hike. She told DN on Thursday that those will get fewer certificates of financing when interest rates go up.

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Mamre points out that many Norwegians are not ready for mortgage rates of three to four percent.

A lot of debt is high. If Norges Bank’s main scenario turns out to be correct and the mortgage interest rate increases from 1.5 to 3.5, that means that interest expense increases by about 4,000 per month for the mortgage by about four million. This is a huge setback for most people.

Moreover, she believes that the announced increases in interest rates will reduce housing prices.

– In general, I expect a slowdown in the housing market in the coming period. Mild at first, but can quickly become self-reinforcing.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.