Older borrowers have to come up with the most expensive mortgage rates, despite the fact that they can 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 justified in a factual way, says former FRP leader Carl I. Hagen (76) to Nettavisen.
A survey from 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 is despite the fact that the elderly have a low loan-to-value ratio and thus pose a lower risk of loss.
As many as 75 per cent of interest rate radar users (see below) over the age of 50 have a loan-to-value ratio of less than 70 per cent, compared with only 39 per cent of users under the age of 34.
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Should investigate
– I expect the Equality and Anti-Discrimination Ombud to investigate this and look at what justification the banks use. It would also have been interesting to see an overview of non-performing loans. Even though I do not have figures for it, it should not surprise me if older borrowers are more solid than younger ones, he continues.
According to the July survey by Renteradar.no, borrowers under the age of 35 pay an effective interest rate of 1.76 per cent for a mortgage of NOK 4 million. Borrowers over the age of 50 have to pay 2 percent. For a loan of NOK 4 million, this interest rate difference amounts to NOK 10,000 in the year before tax.
– We generally see that our older users have the most to save on mortgages. It has something to do with the size of the loan, that the banks reward large loans, says Sindre Noss in Renteradar.no to Nettavisen Økonomi.
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Premiering
– But we also see that within the different loan sizes there are differences in age groups. The banks reward young people, especially those under the age of 34, with a number of special offers. The banks know that if they bring in customers at a young age, they stay there for a long time. Therefore, the banks consciously want to connect with the young.
Noss believes some of the difference is due to the fact that the banks offer a good interest rate on first home loans. When the borrowers reach a certain age, the banks start to raise interest rates if the older borrowers do not keep up.
– This especially applies to the age group over 50 years, who have paid down a good deal on the loan. For these, it is a long way to go to change banks. The banks are taking advantage of the situation and, in our opinion, are giving these far too high interest rates, says Noss, who himself 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 takes place via electronic signatures.
– And you do not necessarily have to change the entire bank connection because if you change mortgages, it is an important point, says Noss, who claims he has some pretty long stories from users.
CLEAR TREND: The oldest borrowers have to shell out the highest mortgage rates, according to Sindre Noss in Renteradar.no
Photo: (Renteradar.no)
– Some of those who use our service have saved 1 percentage point on changing banks, and these are mostly older customers. There is a bit of naivety in the market, people trust their bank very much. The result is that banks are raising interest rates as much as they can.
The service to Renteradar.no can be used by mortgage customers in the DNB, Nordea, SpareBank 1 banks and Eika banks. Noss claims that Nordea comes out best of these banks, they differentiate least among customers by age. According to Noss, the worst are some of the SpareBank1 banks.
In addition, Renteradar.no has a commercial collaboration with Sbanken, Bulder Bank and Landkreditt Bank.
Saw it early
– Is there anything that surprises with the figures in the survey?
– No, we started the service towards the end of last year and discovered the trend at the beginning of the year. We might have hoped through the interest rate cuts during the corona crisis that the banks had taken on a slightly greater responsibility.
– We see hints of that, but it is still quite obvious that the older mortgage borrowers pay the most, Noss answers.
New figures from Statistics Norway show that the average floating mortgage rate is 1.96 per cent. Those who took out a new floating mortgage in July escaped 1.82 per cent, marginally up from June.
– What would you say is a good housing rent today, given serviceability and collateral?
– Older borrowers with a loan-to-value ratio below 60 per cent pose almost no risk to the bank. They should typically have an interest rate below 1.6 percent, Noss answers.
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Extremely complicated
The youngest borrowers are thus the big interest rate winners. For example, Danske Bank’s best offer to the youngest borrowers is as low as 1.25 per cent in nominal interest rates. Again, the question is whether the banks are jacking up the terms as borrowers get older.
– You have to ask the banks about that. Banks’ pricing of mortgages is extremely complicated and much more complicated than it needs to be. The loan-to-value ratio, which should have been an important part of the price picture, turns out to have little to say in practice.
– It is first and foremost the customers’ age, as well as their willingness and ability to negotiate the interest rate that matters. The older customers subsidize the younger ones, says Noss.
According to communications manager Synne Ekrem at Nordea, in some cases the elderly pay a higher interest rate. But the loan interest rate depends on several factors, including the size of the loan.
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Individually
Communications adviser Marte Vilming Amundesen in DNB tells Nettavisen that mortgage interest is an individual product. DNB always makes assessments related to serviceability, willingness and safety.
– It is therefore not necessarily the case that only age affects what interest rate you receive. In general, the mortgage rates for our customers are at a record low. Today we give our best prices to customers with green loans, customers with first home loans and the nurses. We also have competitive prices for those who qualify for a framework loan, says Amundsen.
She says DNB has not made any changes in credit practices as a result of the corona crisis, the bank provides mortgages as normal.
– For us, it is important to be a safe and predictable partner for our customers throughout life. We also experience that there are a record number of people who want to become a customer of DNB, claims the communications consultant.
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Paying for depositors
Now that interest rates are far down to zero, banks make little profit from deposits from customers, deposit margins are sharply down. Borrowers have to pay for it.
– Yes, the banks are trying to compensate on the lending side, says Noss.
The banks have a number of administrative costs which he describes as “very high”. Noss believes that these costs should primarily be covered by fees.
– But the banks are cautious here, so they take it back on the interest rate instead. But I believe in changes going forward, start-up banks operate more efficiently and will offer mortgages with reasonable margins. And then I think it will be more difficult for the banks in the future to blame the loan size, Noss predicts.
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