Mortgage rates above 3% are unacceptable

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The limit should be 2.5% recommended Elisabeth Realfsen in Finansportalen journal. This week, Norges Bank increases the key rate, which in turn affects the mortgage rate.

‘’If one is to give guidance on what people should accept to pay, then 2.5% on the mortgage rate will still give the bank a good margin. It’s no shame on the banks’’ said Realfsen.

This applies if you have 80% security for the loan, and at least if you have 60% security.

Unacceptable

A search on Finansportalen, which is a service from the Consumer Council where you can compare bank products and insurance products, shows roughly that about one-third of the banks are priced at over 3% for home loans. This applies whether you have a security of 80% or 60%.

This means that about two-thirds of Norwegian banks that have mortgages as a product offer this at less than 3%.

“If your mortgage rate is above 3 per cent, it is unacceptably high. And since so many of the banks have priced home loans above this level, there is a danger that many Norwegians pay too much for their home loans’’ said Realfsen in Finansportalen.

It is easy to apply for a new mortgage. And the bank is happy to help potential customers. You must have three things: A valuation, which often a real estate agent does for free, you need last year’s tax returns and a paycheck. This is the standard for which the bank requires to process a mortgage application.

Good margin

Norges Bank determined the key rate given on deposits and loans to all banks. It is related to the internal interest rate, NIBOR, which Norwegian banks use when borrowing from one another.

Before the weekend it was 1.37%. The banks’ margin is what lies between the NIBOR rate and what you pay for the home loan.

It is expected that Norges Bank’s key policy rate will rise 0.25% to 1% on Thursday. The interest rate was set from a record low of 0.5 to 0.75% in September last year.

© NTB Scanpix / #Norway Today

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