The forecast for the key interest rate has been adjusted upwards from the previous monetary policy report and indicates a key interest rate that will increase to around 3.5 per cent this summer, Norges Bank reports on Thursday. Norges Bank has decided to raise the key interest rate by 0.25 percentage points to 3 per cent. – There is great uncertainty about the further economic development, but if things go as we now believe, we will raise the key interest rate further in May, says Central Bank Governor Ida Wolden Bache. Took action In December 2020, Matilde Ghisetti (22) and Vegar Bræin (23) bought a brand new terraced house in Sandnes, and borrowed NOK 1.2 million. The house cost 3.25 million. She comes from Italy, and came to Norway because of love in 2019. Now she is taking a bachelor’s degree in biochemistry at the University of Stavanger, while also having a part-time job on the side. The roommate Vegar is an apprentice. When they bought just over two years ago, they got a loan from the bank with an interest rate of 1.44 per cent. WATCH LIVE: Norges Bank holds a press conference at 10.30 Just over two years later, the situation is different. Now the interest on the loan is 3.84 per cent. – We notice it a little. We are lucky, because we don’t struggle so much financially. But the interest rate is of course higher than it should have been, says Vegar. They have spent a lot of time making as many moves as possible to keep expenses down. Like collecting all insurance policies, mortgages and car loans in the same bank, so they can get a discount. – Then we often compare interest rates with other banks, and check with trade unions whether we can get a cheaper interest rate there. The expenses for the loan on the terraced house have almost doubled in two years, the young couple says. Photo: Elise Pedersen / news Fear of even higher interest rates – It’s not something we’re looking forward to. Everything just gets more expensive, and the wallet gets smaller and smaller, says Vegar. When they got the loan, they paid NOK 4,000 a month in interest and installments. Now the monthly price for the same loan is up to NOK 7,000. – It is almost twice as much for exactly the same thing. We have not taken out more loans, but have received so much more in interest, says Matilde. – We pay more in interest than we do in installments, says Vegar. – Can you handle more interest rate increases? – It cannot continue like this for too long. I don’t think a normal family can handle this for long. We feel lucky, but for a family with children it’s not just the rent that increases, says Matilde. They point out that it is not just the rent that has risen during the two years they have lived in the terraced house. When they moved in, they shopped for NOK 300 a week. Now the same shopping list has almost doubled. – For example, we have stopped washing clothes during the day, explains Matilde. When Norges Bank, during Thursday’s interest rate meeting, probably chooses to raise interest rates, the young couple in Sandnes will be watching closely. It can make another dent in an otherwise financially challenging everyday life. – We have spent a lot of time negotiating lower interest rates with various banks. We like to negotiate the rent. And we would recommend others to call the banks to find out if they can lower the interest rate. The worst that can happen is that they say no, says Matilde. A rise in interest rates was expected Ahead of the interest rate decision, all the economists who were asked by the news service Bloomberg expected that the interest rate would be raised by a quarter of a percentage point, and that there could be more. Prices in Norway are still rising far more than the politically determined target of 2 per cent by which Norges Bank manages its interest rate, but Statistics Norway expects that inflation will decrease in the future. The tension among the experts has particularly revolved around how the banking crisis in the USA and Switzerland has affected the interest rate plans at the upcoming interest rate meetings until the summer. The weak krone exchange rate has been a problem for the central bank here at home. Policy rate in percent The policy rate is set eight times a year by Norges Bank. The policy interest rate governs the interest rates in the banks, and affects your housing costs. The aim of raising the interest rate is for the high prices to come down again. The forecast tells us how Norges Bank thinks interest rates will develop in the future. Read more about sources and reservations here. A higher policy rate means increased expenses if you have a mortgage A weak krone contributes to higher inflation, because what we buy from abroad increases in price. In a small open economy like ours, much of what we need is imported. Further rise in interest rates in the US despite banks in crisis Yesterday the US central bank, the Federal Reserve, raised its key interest rate for the ninth time in a row, in line with what had been expected by economists ahead of time. There was tension ahead of the interest rate decision due to the turmoil in the financial market and a banking sector in crisis. Inflation is still high in the US. The central bank did not rule out that further interest rate increases may be necessary. At the same time, it was claimed from the official side that the state of the banking system is healthy. Interest calculator The calculator uses the formula for annuity loans to calculate your monthly costs. Nominal interest is used here. This means that there will be an additional transaction fee which will vary from bank to bank. Today’s interest rate is taken from DNB’s mortgage interest rate for young people, and different banks will have different interest rates. The figures given here will therefore be approximate for you. Monthly expenses are interest and repayments combined. Read more about sources and reservations here. See how much you have to pay if the interest rate increases. Last week, the European Central Bank ECB also raised its key interest rate by 0.5 percentage points, despite the international banking crisis.
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Norges Bank with new interest rate decision today – news Norway – Overview of news from different parts of the country
