Central bank governor Ida Wolden Bache served a really heavy meal for everyone with a mortgage on Thursday: Double interest rate increase of 0.5 percentage points to 3.75 per cent. In addition, she warns that there will be two interest rate increases this autumn, which will increase the interest rate further to 4.25 per cent. Mortgage interest rates will then be around 5.5 per cent. There are NOK 55,000 in interest costs a year for every million you have in loans (before tax). It is a powerful diet. And that also means that Norges Bank is very concerned about the rise in prices. The price increase is miles above the target, and has surprised negatively time and time again. 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 2021 2022 2023 2024 2025 2026 Forecast Norges bank The price increase is now 6.7 per cent, while the target is for it to be around two per cent over time. “If we do not raise interest rates, prices and wages may continue to rise rapidly, and inflation will take hold. Then it can be more expensive to bring the price increase back down,” says Wolden Bache. A real krone pain It is the krone exchange rate in particular that gives the central bank headaches. The weak krone counteracts much of the effect that other price impulses are now decreasing. In the autumn, power prices increased a lot, while in the spring they have decreased. The price impulses from abroad are also weaker now than last autumn. But the weak krone makes it more expensive to buy goods from abroad, and Norges Bank therefore believes that international price impulses will increase significantly for the rest of the year as well. It’s dramatic. At the same time, the high Norwegian wage growth will also contribute to pushing up the prices of Norwegian-produced goods and services going forward. Norges Bank believes that wage growth will end at 5.5 per cent, despite the fact that the framework in this year’s wage settlement ended at 5.2 per cent. Increased food prices The comparison of food prices and the wage trend says something about whether you get more, less or the same amount for your money. When the development of food prices is higher than the development of wages, it means that food has become more expensive. Both figures are averages for the specified period. Read more about sources and reservations here. How much food prices have increased in the past year, compared with wage trends Extra difficult One thing that makes things extra difficult for Norges Bank is that it is much more difficult to predict how things will go when price inflation is as high as it is now. The bank points out that the recent price impulses have been unusually large, and that because there is very little else to compare it with – it is also difficult to say when price growth will actually come down. On top of it all, people’s and companies’ expectations of future price increases also play an important role. When people expect higher prices, they also accept higher prices – and companies would like to take advantage of a climate where it is okay to “take a little”. And although the growth in the Norwegian economy is not particularly strong, Norwegian companies report quite positive prospects going forward. This also makes it difficult for Norges Bank to bring price inflation down. More people are struggling Norges Bank emphasizes that Norwegian households still have more deposits in the bank than they had before the pandemic. Nevertheless, the long-term effects of animal time are revealed in a survey SIFO has made for the Ministry of Children and Families. Just over 150,000 households say they are in bad shape, according to the report. Three-quarters of them default on bills, and nine out of ten in this group say money problems affect their mental health. Not all of this group has a mortgage, as several in this group do not have a high enough or stable enough income. Nevertheless, the survey shows that the group that is struggling is increasing. Central Bank believes that housing prices will fall somewhat in the autumn. You can already see an increase in the number of unsold homes. As Norges Bank itself says, there is an unusually high degree of uncertainty right now. It is not good to say how things will go when many people are unable to service their mortgages. 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.
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This is a heavy interest rate – Statement
