Economists are uncertain about housing rate effects

Norwegian kroner State BudgetNorwegian kroner. Photo: Pixabay

Many of those who have mortgages today have never experienced an interest rate increase. Economists are keen to see how loan takers will react.

Nordea on Friday increased the interest rates on some of its loans by 0.2 percentage points, the first time in many years that a Norwegian bank had done this, writes newspaper Dagens Næringsliv.

– It’s a bit unexpected to see that interest rates are being set up. It’s been a while, says chief economist Harald Magnus Andreassen in Swedbank. He believes more banks may follow the same path but there is low probability for increase rate from Norges Bank or in the money market.

Norwegians on average have twice as much debt as they have in annual income. Andreassen do not think small increase rate will lead to many financial difficulty, but more expensive mortgages could still affect the economy.

– It would be a surprise to many that Norwegian interest rates may rise, since there are very many loan takers who have never experienced it before.

It may be a strange thing “Faderullan, can rate rise?”.

There are enough people who can begin to reduce spending, he said. If enough people do this, the economy will become weaker, which will have consequences for all of us, explains Andreassen.

Other economical newspaper has mentioned that they are uncertain about the effect of a smaller rate increase.


Source: NTB scanpix / Norway Today