SpareBank 1 SMN: New mortgage rate cut by SpareBank 1 SMN

SpareBank 1 SMN is to lower the interest rate on its residential mortgage loans by up to 0.5 percentage points. After two rate cuts in the space of a week, the mortgage has now been reduced by a total of 0.85 percentage points. This, together with other measures such as mortgage payment holidays and advances of unemployment benefit, will help people through the crisis.

The new lowest rate will be 2.00 per cent for Green Mortgages.

“The measures taken to combat the spread of coronavirus are also hitting SpareBank 1 SMN hard. SpareBank 1 SMN will keep its cool, and is going to great lengths to help our customers get through the crisis. The most important measures for those affected are mortgage payment holidays and advances of unemployment benefit. We are now in addition once again lowering our mortgage lending rates with effect as early as four weeks from now compared with the normal practice of six weeks,” says executive director Nelly Maske at Retail Banking, SpareBank 1 SMN.

2,500 have applied for mortgage payment holidays

“Like the rest of the world, Central Norway is in a state of emergency, and SpareBank 1 SMN has now set in train a number of extraordinary measures to help our customers to manage their everyday finances. 2,500 customers have already applied themselves of mortgage payment holidays. We have now extended this period by up to six months, and removed the associated charges,” says Nelly Maske.

NIBOR falling less than the base rate

The banks fund their lending through deposits from their customers and borrowing in the money market. The benchmark interest rate in Norway (NIBOR) is affected by the central bank’s (Norges Bank) lending rate changes, but does not mirror them. Since Norges Bank lowered its base rate by 0.75 percentage points last Friday, NIBOR has fallen by a mere 0.22 percentage points. This is down to increased risk brought about by uncertainty in the market.

The change in mortgage rates will become effective on 25 March for new borrowers and on 30 April for existing borrowers. SpareBank 1 SMN is also revising deposit rates by the same margin. The Financial Contracts Act requires eight weeks’ notice of interest rate cuts on deposits, and the change will therefore take effect on 22 May for existing depositors.

All customers whose interest rates are now changing will shortly receive information on what this means for their mortgages and deposits.