Today the interest rate is really low and it looks to be the same for many years to come. However, last winter, mortgage rates were raised after the Riksbank’s first rate hike in a long time. Then something also happened with the average interest rates and the interest rate discount, which is worth noting.
You may not have as good a deal on your mortgage as you once had. Read on for more info.
The Riksbank had just begun its plan to raise the repo rate a little at a time each year until we reach a more normal level, but this has been partially stopped by the uncertain world and that the US Fed, for example, has flagged for interest rate cuts. As the first small increase came last winter (from -0.50 per cent to -0.25 per cent), most banks also followed suit with increases in mortgage rates.
The mortgage interest rate was raised by approximately the same figures.
From around 2 percent to 2.25 percent and the like (a little different for different banks of course). This applies to the interest rate, the interest rate that the bank has as a starting point. However, it is not the same as the interest that people normally receive, but it is usually possible to get some interest discount when negotiating / bargaining.
How much discount you get depends on various factors such as how good your finances are, how many banking services you can collect with your bank, savings and other things that make the bank think you are a good customer, which they do not want to lose to another bank . The banks are now also printing their average interest rates, to show what people on average receive for actual interest rates. When, for example, JKO’s interest rate was 2 per cent, the average interest rate was about 1.50 per cent instead, which means that people who fixed their mortgages on average received an interest rate rebate of 0.5 percentage points.
Your old interest rate rebate is no longer as good as it used to be
What is interesting, however, is that even though the list interest rate changed from 2 percent to 2.25 percent last winter, the average interest rate has not gone up in a corresponding way. It has even gone down slightly since before. It has been around 1.45 percent in May and June. In practice, this means that those who have taken out new mortgages this spring and summer (or who have renegotiated their old loan) have on average received an interest rate rebate of around 0.8 percentage points instead of 0.5 as it was last year. The interest rate rebate is thus generally larger this year.
This is probably because the banks have fairly good margins on mortgages and that they are not really so pressed to raise prices, even though they chose to do so. Therefore, they can continue to offer an interest rate that is around the same level as before the rate hike. The competition between the banks for mortgage customers can certainly also play a little part.
What I want to put your finger on here is that if you previously have a mortgage with an interest rate discount that you have been satisfied with, for example 0.5 percentage points below the list price or 0.7 percentage points for that part, then the discount will still be equal large even after the interest rate hike.
If you got around 0.5 percentage points in interest rebate and thought it was ok because that is what the average discount was at, you will today instead have a worse discount than the average. Today’s average discount is about 0.8 percentage points, which would mean about 0.3 percentage points difference. Or you get about 35 percent less in rebate than the average mortgage customer.
Fix better discount today and save money
If you had fixed a new mortgage today, you probably would have received a larger discount than you got last year. However, you can contact the bank to negotiate your mortgage interest rate, at least as long as you have not fixed the interest rate for several years. If you have a variable interest rate, you can do this almost for free (every three months). If you contact the bank and negotiate the interest rate, you should easily be able to lower your interest rate to at least around the new cut or even lower.
If you already had a better interest rate rebate than the average then you may not have “lost” anything on this phenomenon that I have discussed, but it may still be conceivable that you could get even more discount today than you got when you obtained your loan , given the banks’ margins, etc. They seem to be quite amiable.
So if you have not bargained / negotiated your mortgage for a while (last year or even earlier) you should take a look at what you have for interest and see if you can not get a better deal. In addition to contacting your regular bank, you can also check with some other banks and compare some. Then you can both have this as an argument when negotiating with your current bank and also have the opportunity to switch banks if there are major differences in price.