Renegotiating a mortgage is easier than you think.
There’s never been a better time to switch banks. While ordinary people suffer, banks have sharply raised their lending rates. At the same time, they kept deposit interest rates historically low. This has led to record profits and profit celebrations at major banks – at the expense of customers.
However, Norwegians remain among the world’s most loyal bank customers. Only 7% of us have changed banks in the last year. Meanwhile, new figures from Norwegian firm Epsi show that DNB and other major banks have it Less satisfied customers.
Why do so many of us find ourselves paying too much?
A. Gunnar Andersen
An additional amount of NOK 150,000 for the same loan
Economic theory tells us that identical products should have identical prices. If one player charges a higher price, customers will go to competitors.
This is not how the banking market works. Although there are more than 100 banks in Norway, the lending rate at the most expensive banks is approximately 3 percentage points higher than at the cheapest.
Many people believe that they are being rewarded for their loyalty when in reality they are being punished
If you have a mortgage of NOK 5 million, each percentage point higher in the interest rate amounts to an additional NOK 50,000 per year – for the same loan.
Such large price differences indicate that competition between banks is not working as it should.
Banks take advantage of your ignorance
There are two reasons in particular why the market doesn’t work: Banks know more than you do and use that knowledge to give you the highest interest rate they think you’ll accept.
Today, you can easily get an overview of the standard interest rates of banks in Finanportalen. However, only a small number of people actually get mortgages at list rates.
First, banks have a range of agreements and discount schemes, for example with trade unions. Learning about these things is a task that few consumers take the time to undertake.
Second, bank advisors have great freedom to make personal offers or match offers from other banks. They can offer discounts to a few customers, because most people don’t ask.
This is how you get a lower interest rate
If you are one of the hundreds of thousands of Norwegians who pay too much interest, there are three steps you can take:
The first thing is to ask if you can get a lower interest rate. Call the bank and ask to meet your loan advisor and ask for a better offer. For many, this is enough. Banks lose more by losing a customer than by lowering the interest rate by a few degrees.
If you get no, the next step is to get an offer from a competing bank. You should start by checking whether you can obtain a discount agreement with another bank through your trade union or other organizations. If not, you should apply for a new loan on the refinancing portal.
If you get a better offer from a competitor, most banks will be willing to match it.
If the bank does not want to match the offer, the third step is to change the bank. Your new bank will help you with this. All you have to do is accept the offer, and the bank will take care of all the paperwork and formalities.
You lose by being loyal
Only a few homeowners renegotiate the terms of their loan. Most clients don’t know how much they can save, think it takes more work than renegotiating or are too shy to ask. Many people believe that they are being rewarded for their loyalty when in reality they are being punished.
New clients get the best conditions. Loyal customers are slowly being cooked as interest rates increase. As in working life, it pays to make high demands and change often.
There is no reason for you to be loyal to a bank that is not loyal to you.
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