Banks lift profit margins as mortgage rates outpace deposit rates
Banks have widened their interest margins by raising mortgage rates more than deposit rates, adding billions of kroner to annual profits.
Recent analysis reveals that Norwegian banks have increased mortgage rates faster than the rates paid on deposits, widening their net interest margin by roughly 0.08 percentage points. Mortgage rates climbed by 0.23 points after the central bank's May rate hike, whereas deposit rates rose only 0.15 points. Given the massive pool of household deposits, this margin boost is estimated to generate multiple billions of kroner in extra yearly earnings.
The pattern appears set to repeat following the September policy move, as banks continue to limit deposit rate hikes. Renteradar notes considerable variation among the 21 largest banks in how they adjust savings-account rates, while industry voices cite fierce competition for loan customers and a surplus of savings in the economy. Consumer advocates advise shoppers to compare high-yield accounts and shift funds from low-interest checking accounts to better-paying savings products.
