Banken Nordirekte cuts mortgage interest rate

The interest rate cut occurs despite Norges Bank announcing an unchanged interest rate for the rest of the year, only cutting in the new year.

Photo: Norddirect

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Digital bank Nordirekte, part of Skagerrak Sparebank, is cutting its mortgage interest rate by up to 0.20 percentage points. Therefore, the bank offers mortgage interest rates starting from 5.28 percent.

– It's about making us more competitive and gaining market share, explains Communications Manager Jan-Erling Kvisvik.

The interest rate cut comes after Norges Bank last week kept the key interest rate unchanged at 4.5 percent. At the same time, the central bank governor was clear that there was no need to raise interest rates further.

The Norwegian Bank has indicated that the first interest rate cut may not come until early next year. Nordirekte won't wait that long.

This is how banks raise money to give you a mortgage

It's more than just the interest rate that affects banks, so changes in the interest rate don't automatically affect the rate (interest) on your mortgage.

In order to give you a mortgage, the bank has three places where they can get the money:

Deposits from clients of other banks, but this is not enough to be able to provide all mortgage loans
Own capital – the bank's own funds can simply be used for lending, but the bank's shareholders demand that the bank receive a certain return on these funds and the capital is also not sufficient to be able to make all real estate loans
Market financing – In order to get the rest of the money needed to be able to give you a mortgage, the bank must go to the financial market and borrow money. Norwegian banks largely obtain this money from abroad.
The cost (interest rate) that a bank has to borrow money in the global financial market depends on several factors, including how strong the bank is in the market and the development of the market in general.

Banks usually follow Norges Bank's prime interest rate, but also market interest rates. If borrowing money becomes cheaper for the bank, it can easily lower the customer's mortgage interest rate.

Competition between banks can also lead to lower interest rates in an attempt to attract more customers.

About the Consumer Council's overview of mortgage interest rates at different banks, financesportalen.no, There are big differences. This means that you can make a lot of money by switching banks.

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