Bank, Mortgage | Grace Period Golden Limit: - If you have it, it's very simple

This fall, the Bank of Norway raised the interest rate. Norwegians across the country are only now beginning to feel the effects of the previous rate hike, but on Thursday of last week Saturday Norges Bank raises interest rates again.

Ica chief economist, Jan Ludwig Andreessen, thinks this is the case Absolutely unnecessary burdenThe economist has repeatedly stressed that Norwegian households do not need more interest rate shocks. Higher interest rates mean more expensive loans for Norwegian mortgage clients, and they have started implementing measures to secure their personal finances.

Two weeks ago, Danske Bank was able to say that They are seeing a huge increase in inquiries from mortgage clients. Customers want freedom of installments, increased repayment period and fixed interest.

“When it comes to the first two installments, which are the interest-free annuity and the incremental adjustment of the repayment period, we have recently seen a more than 50 percent increase in the number of people contacting us regarding this matter,” press director Oustin Schmidt tells Nettavisen.

The interest-free repayment means that you will not pay off your loan for a period of time, but only the interest and any costs.

How easy is it to get interest-free installments in Norwegian banks, and who are the customers who get them?

It is very easy to get this loan to value ratio

They’re also seeing an increase in the number of customers wanting installment freedom, says Heidi Scarrett, Executive Vice President of Personal Marketplace at Storebrand.

“We’ve looked at the numbers just a little bit, but we’re seeing an increase in the number of customers ordered and who have been given the freedom to pay,” Scarett told Nettavisen.

There is one condition that can be decisive for getting an installment exemption from the bank.

Most clients get a loan of less than 60 percent of the value. If you have it, it is very easy to get without the benefits. It is also in line with mortgage regulations, the CEO notes.

Mortgage regulations require loan repayments to be made at a loan-to-value ratio greater than 60 percent. This is the main rule.

However, it may be possible, even if you do not meet the requirements.

– You must have your money in order. If your loan-to-value ratio is above 60 percent, we sit down and consider the possibilities. Scarlett says it might be appropriate to have a shorter grace period.

Storebrand has not seen any significant changes in payment period change requests.

Most clients think the interest-free repayment period is the best thing, says the CEO.

Might be a good idea if you need a short break

At the same time, it is important to remember that you are pushing your problems in front of you to a certain point. The most important thing, she adds, is adjusting your consumption.

– Are there any clients you would recommend applying for a waiver of premiums?

There are quite a few who need a period to save up or organize their finances. Then the interest-free installments can be good. There are also a number of clients in a position where they will soon be given a position with more responsibility and expect an increase in income. In this case, deferring installments may be the order of the day.

The bank has not seen an increase in loan defaults yet.

A mortgage will always be a top priority. Unemployment is at a record low and as long as you work, most people are able to service their mortgage. Scarett concludes that only if you are lucky enough to lose your job can the situation become difficult.

Living in areas with high electricity prices

Nordea director of press Cathrine Graff says the bank has also seen an increase, especially among one group of clients.

— Since this summer, we’ve seen a nearly 50 percent increase in clients applying for interest-free installments, compared to the average in the first half of the year, says Nettavisen’s director of press.

– The vast majority of applicants live in areas of the country where electricity prices are high, so we have so far seen a clear association with high electricity prices.

But this does not necessarily mean that all customers in eastern Norway, southern Norway or western Norway will be able to get premiums.

For all clients it is a combination of things. We do a thorough assessment, but usually a high electricity bill will not be enough to get approval.

Graf stresses that many clients did not agree that banks must follow certain rules, and applied for an exemption from premiums without familiarity with the regulations.

– So many are rejected.

Like Storebrand, Graff points out that there are certain conditions that must be met in order for an installment freedom to be appropriate.

Not everyone can be exempted from premiums. Lending regulations place strict requirements, among other things, for the loan-to-value ratio before giving banks the freedom to repay.

There are also some products that are not usually given interest-free installments, such as fixed rate loans. How long you can have the interest-free repayment depends on why the interest-free repayment is needed and the loan-to-value ratio, Graf concludes.

Ready to adjust your consumption?

Austin Schmidt, Danske Bank’s press director, says they are trying to find a good solution for clients who have noticed the economy has become tighter.

The most important thing for us is to thoroughly assess each client’s situation and then jointly come up with the arrangements that are seen as safe over time – both for us at the bank and for the client, Schmidt tells Nettavisen.

An important element here is that we see that the customer is willing to adjust his consumption as the customer’s financial position changes. It will become even more important to set priorities in terms of spending money in the future, and this is something that could become part of the conversation with the bank, Schmidt says.

In conclusion, Schmidt notes that this service is popular in troubled times.

If you go back to the early months of the COVID pandemic, many people have also come to us with requests for interest-free installments and to extend the repayment period of their loans. If you go back further, we also saw something similar during the 2015/2016 oil crisis, especially with regard to our clients in Western Norway.