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Interest rates on loans near the bottom
statistikk
2009-11-25T10:00:00.000Z
Banking and financial markets
en
orbofrent, Interest rates in banks and other financial enterprises, interest rates, interest on loans, deposit rates, interest margins, banks, mortgage companies, state lending institutions, life insurance companies, Norwegian Public Service Pension FundFinancial institutions and other financial corporations, Banking and financial markets
false

Interest rates in banks and other financial enterprises, Q3 2009

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Interest rates on loans near the bottom

The interest rate on loans from financial corporations continued to fall in the third quarter of 2009. The interest rate on loans from mortgage companies, life insurance companies and The Norwegian Public Service Pension Fund has reached the lowest level ever observed. The interest margin on loans fell while the total interest rate margin was almost unchanged.

Interest rates on loans and deposits in banks, Norges Bank's key policy rate and the NIBOR rate. Q3 2007-Q3 2009

Weighted average interest rates on loans from banks and other financial corporations. Per cent per annum.Q4 1979-Q3 2009

The average interest rate on loans from banks fell by 0.21 percentage points (p.p.) to 4.19 per cent, while the interest rate on deposits fell by 0.20 p.p. to 1.70 per cent in the third quarter of 2009. Hence the interest margin fell by 0.01 p.p. to 2.49 per cent. The interest rate on loans from banks was slightly higher than the record low level in the second quarter of 2009 when the interest rate was only 3.82 per cent. Transfer of loans to new mortgage companies, however, led to higher interest rates on loans from banks. The interest rate on loans from banks and new mortgage companies thereby fell from 4.23 to 3.99 per cent from the second to the third quarter of 2009. The interest rate margin for banks and new mortgage companies fell from 2.33 to 2.29 per cent.

Lower interest margin on loans and increased deposit margin

The money market rate (3 month NIBOR) was only 0.02 p.p. lower at the end of the third quarter 2009 than at the end of the previous quarter. The interest margin on loans thereby fell by 0.19 p.p., while the deposit margin increased by 0.18 p.p. The fall in interest rates in the third quarter is affected by the reduction in Norges Bank’s key policy rate by 0.25 p.p. on 18 June to the record low level of 1.25 per cent. From 29 October, however, the key policy rate was increased by 0.25 p.p.

Interest rates on loans secured by dwellings/housing purposes Q3 1987-Q3 2009

Low interest rates on loans in other financial institutions

The interest rate on loans from mortgage companies and life insurance companies fell by 0.27 and 0.24 percentage points respectively to 3.35 and 3.69 per cent. This is the lowest level of interest rate on loans from life insurance companies from the period for which we have observations. The interest rate on loans from state lending institutions and The Norwegian Public Service Pension Fund fell by 1.21 and 1.02 percentage points to 3.65 and 2.26 per cent respectively. This is the lowest level of interest rate on loans from The Norwegian Public Service Pension Fund ever. At the end of the third quarter 2009 the interest rate on housing loans from banks, mortgage companies and life insurance companies was slightly higher than the record low in the second quarter of 2005.

Interest rates in financial corporations. 3rd quarter 20091
 
  30.09.2009 30.06.2009 31.03.2009 31.12.2008 30.09.2008 Changes in interest rates Share of loans
  Last quarter Last year 30.09.2009 30.06.2009
 
Total loans from banks2 4.19 4.40 5.25 7.28 7.80 -0.21 -3.61 64.8 66.8
Total bank deposits2 1.70 1.90 2.86 4.61 5.60 -0.20 -3.89 n.a n.a
Banks' interest rate margin (1-2)2 2.49 2.50 2.38 2.67 2.21 -0.01 0.28 n.a n.a
                   
Lending rate, mortage companies 3.35 3.62 4.41 6.45 6.86 -0.27 -3.50 26.2 24.2
Lending rate, life insurance companies 3.69 3.93 4.69 5.57 6.51 -0.24 -2.82 1.3 1.3
Lending rate, state lending institutions 3.11 4.20 4.91 4.95 4.59 -1.09 -1.48 7.7 7.7
Lending rate, state lending institutions exsclusive loans with zero interest rates in the Norwegian State Educational Loan Fund 3.65 4.86 5.70 5.65 5.40 -1.21 -1.75 6.6 6.7
Total loans from financial corporations3 3.88 4.19 5.03 6.91 7.37 -0.31 -3.49  100.0  100.0
                   
The Norwegian Public Service Pension Fund 2.26 3.28 5.32 6.39 6.39 -1.02 -4.13 n.a n.a
                   
NIBOR (3 month effective)4 1.98 2.00 3.05 4.09 8.03 -0.02 -6.05 n.a n.a
Deposits margin (8 - 2)2 0.28 0.10 0.18 -0.52 2.43 0.18 -2.16 n.a n.a
Loans margin (1 - 8)2 2.21 2.40 2.20 3.19 -0.22 -0.19 2.43 n.a n.a
                   
Banks. Repayment loans with home mortgages 3.86 4.05 4.86 7.12 7.44 -0.19 -3.58 29.3 30.6
Banks. Credit loans with home mortgages 3.21 3.44 4.42 6.86 7.23 -0.24 -4.03 7.1 7.4
Banks. Loans margin repayment loans with home mortgages (9 - 8) 1.87 2.05 1.82 3.03 -0.59 -0.17 2.46 n.a n.a
Banks. Loans margin on credit loans with home mortgages 1.23 1.44 1.38 2.77 -0.79 -0.22 2.02 n.a n.a
                   
Mortgage companies. Repayment loans with home mortgages 3.37 3.60 4.49 6.91 7.37 -0.23 -3.99 12.4 11.1
Mortgage companies Credit loans with home mortgages 3.07 3.32 4.27 6.72 7.23 -0.25 -4.16 5.2 4.6
Life insurance companiess. Repayment loans with home mortgages 3.50 3.83 4.58 5.42 7.14 -0.33 -3.63 0.4 0.4
State lending institutions. Repayment loans with home mortgages 3.54 4.25 5.06 5.09 4.86 -0.72 -1.32 2.8 2.8
                   
Home mortgages from financial corporations 3.70 3.95 4.79 6.93 7.26 -0.25 -3.56 44.9 44.9
Credit lines from financial corporations 3.15 3.40 4.37 6.82 7.23 -0.25 -4.08 12.3 12.0
Housing loans total from financial corporations 3.58 3.83 4.71 6.91 7.26 -0.25 -3.68 57.2 57.0
                   
Key policy rate3 1.25 1.25 2.00 3.00 5.75 0.00 -4.50 n.a n.a
Overnight lending rate3 2.25 2.25 3.00 4.00 6.75 0.00 -4.50 n.a n.a
Total loans from banks and mortgage companies 3.95 4.19 5.04 7.09 7.62 -0.24 -3.67 91.0 91.0
 
1  Weighted average interest rates incl. commissions on NOK loans from banks and other financial corporations.
Weighted average interest rates on deposits in banks from non-financial enterprises, households and local government. Weighted average interestmargins in banks. Per cent per annum.
2  Interest rates on loans and deposits in banks are revised.
3  Includes banks, mortgage companies, life insurance companies and state lending institutions. The Norwegian Public Service Pension Fund is not included.
4  Source: Norges Bank.

Definitions and other important information:

The interest margin: the difference between banks’ average lending and deposit rates. Banks continue to transfer housing loans from banks to mortgage companies and to establish new mortgage companies. These loans are used as security for these companies’ purchases of bonds with priority. A lower share of housing loans in banks’ lending portfolio leads to an increase in the average interest rate on loans from banks and higher interest rate margins because interest rates on loans secured by dwellings are usually lower than interest rates on other loans.

 

The lending margin: the difference between banks’ interest rates on loans and the NIBOR rate.

The interest margin on deposits: The difference between the NIBOR rate and banks’ interest rates on deposits.

 

Please note that the interest rate on banks loans and deposits, the lending margin and the interest margin on deposits in the second quarter of 2009 are revised.

 

By the end of the third quarter of 2009, the interest rate statistics encompassed three state lending institutions, five life insurance companies, 25 mortgage companies and 152 banks, plus The Norwegian Public Service Pension Fund.

 

The floating interest rate on loans from state lending institutions is determined by the interest rate on treasury bills three months before the decisions are made. The interest rate on loans from The Norwegian Public Service Pension Fund follows the official standard rate that is also determined by the interest rates on treasury bills, but with an observation period of two months only.

 

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