Tens of thousands hit financial difficulty with even a little rise in interest rates

Housing prospectsOslo.Housing prospects.Photo: Vegard Wivestad Grøtt / NTB scanpix

70,000 households in this country say they will have trouble managing their mortgage if interest rates rise by just one percentage point.

This is shown in a survey conducted by Norstat for Nordea. Figures from the Financial Supervisory Authority demonstrated that every fifth borrower under the age of 35, took out mortgages at five times their income last year.

‘The explosive growth in house prices has meant that more of us have taken on large loans. These responses testify that for many people,resources are stretched to breaking-point. We have a requirement that customers must accept rate increases of at least 5%. Especially among young people, we have noticed that there are unrealistic expectations of how much they can manage to cope with debt’, said Head of Nordea’s customer services, John Sætre, to NRK news.

Except for faith in higher house prices, the survey shows that people have a fairly subdued outlook for 2017. There is more fear of rising unemployment, and few have high expectations for wage rises.

‘Just because house prices have risen sharply for an extended period of time now, there are no guarantees that it will continue. We currently have record low interest rates, but it is not certain that it will remain like this in the future. The interest rates may actually begin to rise again’, warned Sætre.

 

Source: NTB scanpix / Norway Today

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