Danske Bank cut the mortgage rate to below 2%. Now they want to compete continuously, experts believe.
The best customers of Danske Bank will now receive a rate of 1.95%. In a short period of time, more banks will cut interest rates by up to 0.25%, and with their favourable terms below 2%, the market will follow, reported ‘Today’s Business’.
‘When someone starts the party, the rest wants to join in,’ said Pål Ringholm, Analytical Manager at Sparebank 1 Markets.
The bank’s profit, the difference between the cost of borrowing and what they recoup in the form of interest income from customers, has been just under, or above 1%. Earnings in 2017 have increased gradually. Ringholm believes the banks look forward to sharing some of the profits with their customers.
‘Banks have made a lot of money by keeping interest rates artificially high when the money market rate has fallen as much as it has done,’ said Jorge Jensen, CFO at the Consumer Council, when he heard the news about Danske Bank’s interest rate cut.
He also believes that the competitive situation will cause more banks to follow suite.
© NTB Scanpix / Norway Today