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Friday, October 7, 2022

New demand for fixed-rate loans

Norwegians have no tradition of taking on fixed-rate mortgages, with the overwhelming majority of banks making mostly adjustable-rate mortgages that follow the interest rate market. Now, with interest rates set to remain low, fixed-rate loans have suddenly become popular.

“We’re experiencing an incredible demand for fixed-rate mortgages,” Monica Haftorn Iversen of Fokus Bank told newspaper Aftenposten. She said that around 35 percent of the bank’s new mortgages made in September carried fixed rates, compared to just 6 percent in May.

The fixed-rate loans are more expensive, with rates around a half-point higher than the current adjustable rates of around 4 percent in return for some interest-rate stability. The term fastrente (fixed rate) is relative, though, and banks aren’t offering the kind of fixed-rate loans made in the US that had a 30-year term. Banks in Norway are offering their “fixed rates” for just five years, and normally only on amounts up to around 75 or 80 percent of the home’s market value.

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