An interest rate increase of more than 1% is more than 420,000 Norwegians will manage to handle. Half of these will manage no increase whatsoever.
Consumer economist, Magne Gundersen, of Sparebank 1, pinpointed the figures in the survey that Respons Analysis carried out on behalf of the bank, which make sad reading.
‘This should be absolutely unnecessary. When you get a mortgage, you will be tested by the ban, so to be able to withstand an interest rate increase of up to 5%, and still
manage the usual expenses. When so many say they won’t manage a small increase in the rate of interest, they have made an excessively high purchase’, said Gundersen to NTB news.
Increase in its way
Central Bank chief, Øystein Olsen, announced on Thursday that the record low interest rate of 0.5% is likely to get its first rise in a year.
Olsen added that it should be done carefully. But at the same time, Norges Bank has now pushed the time frame for the first interest rate jump a half year earlier than the central bank had previously suggested.
Lighter prospects for the Norwegian economy are one of the reasons for the increase in interest rates.
Gundersen advised those who already know that they are going to struggle, to prepare.
‘Very many seem to wait for a low interest rate so that all that remains after loan and interest are paid goes toward consumption. They face a tough reality check. But if they manage to tighten up on consumption spending, the transition will be simpler, and an interest rate shock can be curtailed’, said Gundersen.
Three out of ten
Over 1,000 people participated in the online survey, conducted between the 6th and 13th of December. Of those who have mortgages, just under three out of ten (27%) responded that their budget will withstand a 5% increase in interest rates.
7% said they can’t withstand higher mortgage rates than today, and as many said that they can withstand an increase of up to 1%. This corresponds to a total of about 420,000 borrowers.
Just under half (45%) said they can withstand an interest rate increase of up to 4%.
NTB Scanpix / Norway Today