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Older borrowers have to come up with the most expensive mortgage rates, even though they may offer the best security. Carl I. Hagen reacts strongly to this.
– I think this is sensational and, in my opinion, illegal. The Discrimination Act prohibits this type of Carl from being discriminated against. There may be cases of factual discrimination due to age, but it must be factually justified, former FRP leader Carl I. Hagen (76) tells Nettavisen.
A survey by Renteradar.no in July shows that the average effective interest rate for those over 50 is 0.24 percentage points higher than for those under 35. This despite the fact that older people have a low loan-to-value ratio and therefore have a lower risk of loss.
Up to 75% of interest rate radar users (see below) over the age of 50 have a loan-to-value ratio of less than 70%, compared to just 39% of users under 34.
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Should investigate
– I hope the Ombudsman for Equality and Anti-Discrimination investigates this and sees what justification the banks use. It would also have been interesting to see an overview of delinquent loans. Although I don’t have numbers on this, it shouldn’t surprise me if older borrowers are stronger than younger borrowers, he continues.
According to Renteradar.no’s July survey, borrowers under the age of 35 pay an effective interest rate of 1.76 percent on a NOK 4 million mortgage. Borrowers age 50 and older must pay 2 percent. For a NOK 4 million loan, this interest rate difference amounts to NOK 10,000 in the year before tax.
– We generally see that our older users have more to save on mortgages. It has something to do with the size of the loan, that banks reward large loans, says Sindre Noss in Renteradar.no to Nettavisen Økonomi.
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Premiere
– But we also see that within the different loan sizes there are differences in age groups. Banks reward young people, especially those under 34, with a number of special offers. Banks know that if they attract customers at a young age, they stay there for a long time. Therefore, banks want to consciously connect with young people.
Noss believes that part of the difference is due to the fact that banks offer a good interest rate on first home loans. When borrowers reach a certain age, banks start to raise interest rates if older borrowers don’t keep up.
– This especially applies to the age group over 50, who have paid a good price on the loan. For these, there is a long way to go to change banks. Banks are taking advantage of the situation and, in our opinion, are giving these interest rates too high, says Noss, who has many years of banking experience.
Lower threshold
But he also believes that there is a lower threshold than before for changing banks. Much of the exchange process is automated and is carried out using electronic signatures.
– And you don’t necessarily have to change the entire bank connection because if you change the mortgages, it is an important point, says Noss, who claims to have some fairly long user histories.
CLEAR TREND: Older borrowers have to pay the highest mortgage rates, according to Sindre Noss at Renteradar.no
Photo: (Renteradar.no)
– Some of those who use our service have saved 1 percentage point when changing banks, and the majority are older customers. There is a bit of naivety in the market, people trust their bank a lot. The result is that banks are raising interest rates as much as they can.
The Renteradar service cannot be used by mortgage clients in DNB, Nordea, SpareBank 1 and Eika banks. Noss claims that Nordea does better out of these banks, they differ less between clients by age. According to Noss, the worst are some of the SpareBank1 banks.
Furthermore, Renteradar.no has a commercial collaboration with Sbanken, Bulder Bank and Landkreditt Bank.
I saw it early
– Is there anything surprising about the survey figures?
– No, we started the service at the end of last year and discovered the trend at the beginning of the year. We could have hoped through the interest rate cuts during the crown crisis that banks would have assumed slightly more responsibility.
– We see signs of that, but it is still quite obvious that older mortgage borrowers pay more, Noss responds.
New figures from Statistics Norway show that the average floating mortgage rate is 1.96%. Those who took out a new floating mortgage in July escaped to 1.82 percent, slightly above June.
– What would you say is a good rental home today, given the ease of service and guarantees?
– Older borrowers with a loan-to-value ratio of less than 60% pose almost no risk to the bank. Typically, they should have an interest rate below 1.6 percent, Noss responds.
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Extremely complicated
The youngest borrowers are therefore the big winners of interest rates. For example, Danske Bank’s best offer for younger borrowers is as low as 1.25% in nominal interest rates. Again, the question is whether banks are improving terms as borrowers age.
– You have to ask the banks about that. The price of mortgages by banks is extremely complicated and much more complicated than necessary. The loan-to-value ratio, which should have been an important part of the pricing picture, turns out to have little to say in practice.
– What matters above all is the age of the clients, as well as their willingness and ability to negotiate the interest rate. Older clients subsidize younger ones, Noss says.
According to communications manager Synne Ekrem at Nordea, in some cases, seniors pay a higher interest rate. But the interest rate on the loan depends on several factors, including the size of the loan.
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Individually
Communications advisor Marte Vilming Amundesen at DNB tells Nettavisen that the mortgage interest is an individual product. DNB always conducts assessments related to serviceability, willingness, and safety.
– Therefore, it is not necessarily true that only age affects the interest rate you receive. Overall, mortgage rates for our clients are at an all-time low. Today we give our best prices to clients with green loans, clients with first home loans and nurses. We also have competitive prices for those who qualify for a framework loan, says Amundsen.
She says DNB has not made any changes to lending practices as a result of the crown crisis, the bank offers mortgages normally.
– It is important to us to be a safe and predictable partner for our customers throughout their lives. We also experience that there are a record number of people who want to become clients of DNB, says the communications consultant.
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Pay for depositors
Now that interest rates are well below zero, banks make little profit on customer deposits, deposit margins have dropped dramatically. Borrowers have to pay it back.
– Yes, the banks are trying to compensate on the loan side, says Noss.
Banks have a number of administrative costs that he describes as “very high.” Noss believes that these costs should be covered primarily by fees.
– But banks are cautious here, so they backtrack the interest rate. But I believe in the changes to come, the start-up banks operate more efficiently and will offer mortgages with reasonable margins. And then I think it will be more difficult for banks in the future to blame loan size, Noss predicts.
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