Interest rates in banks and other financial enterprises, Q1 2007

During the first quarter 2007, the interest rate on loans from banks increased by 0.55 percentage points to 5.25 percent, while the deposit rate increased by 0.53 percentage points to 3.13 percent. The sight deposit rate increased by 0.50 percentage points, while the 3 months nibor rate increased by 0.58 percentage points in this period.

Continued fall in the interest rate margin in many banks

The difference between the interest rate on loans and the deposit rate, the interest rate margin, increased by 0.02 percentage points to 2.12 percentage points. About 0.05 percentage points of the increase in the interest rate on loans from banks are due to new banks that were classified as financial companies before. These banks have higher interest rates on loans because a larger share of their loans is consumer credit loans or repayment loans without a mortgage. Adjusted for these new banks the banks interest rate margin fell to 2.07 percentage points.

The interest rate on loans from State lending institutions was almost unchanged last quarter

During the first quarter of 2007 the interest rate on loans from State lending institutions fell by 0.01 percentage points to 3.38 percent. The decrease is among other factors due to new loans to students who does not pay interest rates. During the last two years the interest rate on loans from state lending institutions has increased only by 0.02 percentage points. The main reason is that a large share of the loans from State lending institutions have fixed interest rates. Another reason is that the interest rates for new loans are not adjusted frequently.

The interest rates on loans from mortgage companies and life insurance companies increased by 0.54 and 0.47 percentage points respectively last quarter. While the interest rates on loans from banks increased by 1.19 percentage points during the last year, the increase in interest rates on loans from mortgage companies and life insurance companies was lower; 1.01 and 0.84 percentage points respectively. The explanation is likely that mortgage companies and life insurance companies have a larger share of loans with fixed interest rates than banks.

The interest rates on loans from The Norwegian Public Service Pension Fund increased by 1.26 percentage points last year. The reason why the increase in the interest rate on loans from The Norwegian Public Service Pension Fund was larger than in banks may be that The Norwegian Public Service Pension Fund only offers loans with floating interest rates.

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