Two years ago, the first rate hike came from a zero interest rate. Although the interest rate level is more normal than high, it is starting to hurt many, says Prout.
– It may be true that the interest rate historically has not been that high, but it is no consolation for those who are struggling to maintain their financial resources, says the bank director.
The Bank of Norway indicates that the interest rate will rise again this year, and then remain stable in 2024. It believes that we should be prepared that it may get a little worse, before it gets better.
– When the key interest rate rises, banks usually follow suit. Prout says interest rate hikes from banks have an effective period of eight weeks – so this interest rate increase takes effect in the middle of the Christmas season.
This is what people are wondering now
He believes that most people did not imagine that interest rates would rise so quickly.
– If you’ve taken out a mortgage in recent years, and you maxed out what you could borrow at the time, you’ll notice that in your portfolio now.
It is then important to get an overview of what the family is spending money on and reduce it where possible.
- Do you depend on two cars?
- Subscribe to too many streaming services?
- Do you have expensive debts that need to be paid off?
For clients who are going to buy a home now, the focus has changed, Prout says.
– Previously, everyone was asking how much they could borrow – that is, the maximum loan amount. People are now more interested in what they can actually offer. This is a clear trend at the moment, he says, and is a manifestation of the fact that many people are becoming more cost-conscious.
Many choose terms with interest-free repayment
Some choose not to pay premiums for short periods. Although the interest-free repayment trend reversed in 2023, the number of customers taking interest-free repayment periods has more than doubled since before Corona.
-The most common reason is short-term challenges in one’s finances. If unexpected expenses arise, and you don’t have a reserve saved that can cover the extra cost, interest-free installments can be a good solution, says the bank manager.
Another common reason is separation.
– When you’re going through a breakup, you often need some time to get an overview of the situation and the way forward. Hence it may be appropriate to avoid paying premiums for a short period of time.
Hesitant to talk to the bank
Finances seem private to many and it’s not easy to understand everything. The bank manager at Sparebanken Vest believes that some people are reluctant to contact the bank because they feel ashamed that they do not have control over their money.
– Then I can assure you that we have seen and heard it all before, and no doubt about it is very stupid, and moreover, of course, we are bound by secrecy. If you think you need help – contact us as soon as possible. Most people struggle in silence for a very long time, perhaps so long that it is too late. Prout says it’s easier to find good measures at an early stage.
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Øyvind has warned against interest rate jumps: – I am glad that we chose to hold the interest rate this spring
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