Today came as a surprise to many. Norges Bank raised the key interest rate by a hefty 0.5 percentage points, this time ending at 1.25 per cent. Such a big jump has not been seen in 20 years. In August, it will continue up to 1.5 percent. By the summer of next year, it will probably increase to 3 percent. Worried? You may not really need to be. Now we come to what will still be a low interest rate, says Linda Tofteng Eliassen. She is a consumer economist at SpareBank 1 Nord-Norge: – When you get a loan, we stress test the bank’s finances. All banks add 5 percent. So those who have a mortgage today should be able to withstand 6-7 percent. She explains that we are now actually on the way up to a more normal interest rate. – A few years ago it was said that the normal is 4-5 percent. Most people can handle this. If you have 4 million in loans and the interest rate in your bank increases from 2.5 to 3, then it amounts to a thousand kroner extra a month. Or 800 kroner after the tax deduction. But it is clear: Some have tight finances. For them, any interest rate increase will be a problem. – But we see that for most people this must be tolerated well. At least on paper: – Then we see that one has acquired other expenses after that. This may be where you need to see if you can cut something. – If you have two cars, you can, for example, consider doing as a colleague of mine – and go down to one. – Have we had too good advice for a long time now, so that interest rates have to go up? – We have had unnaturally good advice due to the very low interest rates, the expert points out. We have had good advice But why do interest rates really have to go up? Yes, it is, among other things, to calm consumption. – We have had an insanely high consumption in the last 10 years. We Norwegians have had a lot of money. I think people have thought that this is a normal economy, and then it really is not. This means that the interest rate increase will feel painful to many. Consumer economist Silje Sandmæl in DNB. Photo: Stig Fiksdal / DnB – But for most people it is not a crisis. Just a job that needs to be done, says Eliassen. Silje Sandmæl, consumer economist at DNB, believes we must prepare for a doubling from the current level. – Then one must not forget that the interest rates we have had have been very, very low. But for the young people who have never felt a higher interest rate, it can be tough going forward. – About 30 years ago, the interest rate was 16-17 percent? – We will not see such interest rates again. But it is clear that you turn your consumption to a low interest rate, and now you have to go through the economy. That’s why interest rates go up Silje Sandmæl explains: – Interest rates are a way to get people to slow down their consumption. For what we see now is that the prices of goods and services have been very high and seem to be high in the future as well. – Then you have to increase the key interest rate so that the mortgage rate becomes more expensive. In this way, people will have less to deal with, which in turn will lead to prices falling for goods and services. Throwing less food The economy has been so good that we, for example, throw away incredible amounts of food. – There is almost no one who throws as much as us. Almost one-third, says Eliassen in SpareBank 1 Nord-Norge. A family of four who spend about 14,000 on food a month will then throw away food worth 3-4 thousand every month. – So we have something to go on just there. She also has an example she sometimes cites: – It was a picture of a person I saw. He complained about high fuel prices. At the same time stood with a bottle of Farris in hand. In other words, we have the cleanest water in the world – but are still willing to pay 50 kroner a liter at the petrol station. So a simple step is to get an overview of what you spend the money on. More difficult to negotiate the interest rate And if you are among those who are struggling, you can keep in mind that it is possible to extend the repayment period. Or get a grace period for a period. – Is it possible to negotiate interest rates now? – Before, it was a bit to go on. Now there is less room for that, unfortunately. Due to fierce competition between banks over many years, interest rate differentials have become small. That said, it costs nothing to check. If you sleep poorly, you can go to most banks and make a calculation. Then you see what an interest rate increase will cost. – It helps a lot to see the amount, rather than it appearing vague and perhaps scary. – What other advice do you have? – The good economy we have had in the last 10 years has led to only 1 in 4 of us managing the economy according to a budget. So take half an hour and write down your expenses. Then you will automatically get an overview, and consider whether you need to cut somewhere. – For many, it is the key to an action plan if the need to adjust expenses arises, Eliassen concludes.
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How to handle the economy – news Nordland
