This summer, the Goodbank decided that the repo rate would be lowered from 0.75 to 0.25 percent. Most people thought that a cut in the interest rate was coming, but it was a little unexpected that it would be such a big cut. The Goodbank justified its decision that inflation was lower than expected and that it was expected to remain low, so something was needed to bring some inflation to the fore.
We now have a very low policy rate and this obviously affects us consumers by giving us cheaper loans but also very low savings rates. It is not much worth saving money on a savings account now but the advantage is that you will be able to get cheap mortgages in the future. But what does the Goodbank’s decision mean to give us a repo rate of only 0.25%? We will consider this a bit more here.
Stable repo rate in the future
The current interest rate level is expected to remain for a good while and there will probably be no increase in interest rates until the end of 2015. This means that we do not have to worry about the interest rate moving very much and it paves the way for continuing to invest in a variable interest rates. It may feel like it is a good place to fix the interest rate because it is so low, but just because it will be so stable in the future, it is a fairly safe bet to keep your mortgage moving, which is normally cheaper.
The Goodbank’s own interest rate forecast says it may take up to three years before we reach a repo rate of two percent. This is a fairly long time and it provides a very stable interest rate position that favors a variable interest rate investment. It does not feel like you who choose variable interest rates need to worry about some sharp increases in the near future and you can thus feel pretty confident with your choice.
Many banks will probably lower their mortgage rates
SBAB has already lowered its fixed mortgage rate and more cuts are expected to come in the future, even for the floating rates. If you want to review your mortgage, this is a good time to do so, especially if your bond loans start to reach the end of the maturity period. So if you have mobility, then the tip is that we have already said to simply stay on this and enjoy the low costs. However, do not forget to save money for the future when interest rates will be raised.
The experts believe that the floating mortgage rates should end up somewhere around 2.25% in the future. Right now, the level is around 2.42%, so there is a little more margin to take in here before interest rates reach the bottom levels. In many cases, the 1-year interest rates are actually lower than the floating rates, but the reason for this may be that the banks want to attract people to commit themselves before they lower the floating rates further.
Do not settle without bargaining on the interest rate
Even if you have the opportunity for a really low interest rate now, you should not settle for anything without negotiating. There is often a lot to do and now when it is low interest rates you have a good starting position when negotiating. A large reduction in the repo rate can give you additional room to bargain on your mortgage and you can get as little as 1.70 – 1.80 percent in interest if you are an attractive customer and do your job well when you talk to the bank .
So do not take the first best offer you see but take the time to negotiate a little and you will see that you can save extra money. On a large mortgage, there is a huge difference with an interest rate of 2.20% and an interest rate of 1.80%. If you have a million in loans, the difference is more than USD 150 a month. And then this is only money that you save by bargaining and negotiating with the bank. It’s not a shame.