It feels like we’ve been on a long journey, which is coming to an end soon. Finally, Central Bank Governor Ida Wolden Bache came up with the phrase Norwegian mortgage customers have been waiting for for a long time: – The time to lower the interest rate is approaching, she said at the press conference in connection with the interest rate decision. For now, the policy rate is fixed at 4.5 per cent, but we are now probably only months away from the first cut. Norges Bank will maintain the current level for the rest of the year, before the first cut comes during the first months of the new year. More interest rate cuts next year Then the cuts will come slowly but surely; there will probably be three or four cuts in total next year, and two or three cuts in 2026. When we go into 2027, it may be that the key interest rate will be at 3 per cent, which means a mortgage interest rate of around 4.5 per cent. If you have a mortgage of NOK 4 million, that means NOK 5,000 less in interest costs per month, before tax. But there is a long way to go. Those of us who have followed Norges Bank for a few decades know that forecasts can change quickly. 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. There are primarily two considerations that Wolden Bache must now balance: Bringing down price inflation will take time. Now the price increase has leveled off, and if you ignore energy prices, the price increase is 3 per cent. Norges Bank has a target of a price increase of 2 per cent, and even if it sounds like you are “just around the bend”, the last percentage point may take time to achieve. In fact, the central bank does not think we will see 2 percent until 2027. There are several reasons why it will take time. Wage growth in Norway is high, and will probably end at 5.2 per cent this year. Next year, Norges Bank believes it could be almost as high. This contributes to increased costs for companies, and can contribute to price growth staying up. In addition, the krone is weak, which makes everything we import more expensive. This results in high prices both in the shop and for the companies that depend on importing input factors. For the exporting companies, who are well paid for the goods they sell abroad, this results in increased profitability and thus increased earning capacity. 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 2022 2023 2024 2025 2026 2027 Forecast Norges bank Can slow down too much On the other hand, Wolden Bache must take into account that an interest rate that is too high, for too long, can slow down the economy more than necessary. She points out that there are big differences within the various industries in Norway, where the oil industry benefits from a high level of investment, while the construction industry is struggling. The labor market is now less tight, and it is easier to get hold of people. Unemployment is still very low in a historical perspective, but is on the rise. The vast majority will get better It is dangerous to say anything certain about the future, at least when it comes to the economy – but it is likely that the year ahead of us will feel easier on the wallet. The vast majority of us will be able to afford better than we have had in both 2024 and 2023. Because even though we will continue to spend a lot of money servicing our mortgage, the interest costs will gradually become a little less – while we will get enough a year of good wage growth. Wage growth will also be far above price growth. For one million Norwegians who rent a home, it is good news – as rent prices are adjusted in line with the general rise in prices. Both economists and a hopeful prime minister have long talked about better times for the wallet, without people really noticing. Now, in fact, there may soon come a time when it feels real. Published 19.09.2024, at 11.39
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Soon you will actually feel that you are getting better advice – Speech
