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Interest rates on loans increased less than NIBOR
statistikk
2010-08-25T10:00:00.000Z
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, Q2 2010

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Interest rates on loans increased less than NIBOR

In the second quarter of 2010 the money market rate (NIBOR) increased more than the interest rate on loans from Norwegian banks. As a result, the banks’ loans margin fell. In the same period, the interest rate on loans increased more than on deposits and therefore the interest margin rose.

Interest rates on loans and deposits and NIBOR. 2008Q2 - 2010Q2

Banks. Interest rates on total loans, deposits and interest rate margin. Q2 2009-Q2 2010

The average interest rate on loans from banks increased by 0.14 percentage points to 4.56 per cent, while the interest rate on deposits increased by 0.12 to 2.11 per cent in the second quarter of 2010. Hence the interest margin increased to 2.45 per cent. The interest rate on loans from mortgage companies and state lending institutions increased as well, but the increase was lower than in banks. The interest rate on loans from mortgage companies, state lending institutions and life insurance companies was 3.49, 2.76 and 3.79 per cent respectively at the end of the second quarter.

Increase in money market rates

NIBOR (3 months effective) was 2.86 per cent at the end of the second quarter 2010. This is the highest level for this rate in over one year. The increase in this money market rate in the last quarter was higher than the increase in interest rates on loans from financial corporations. One reason for this could be that the banks and other financial corporations have to inform debtors six weeks in advance of interest rate increases on loans with floating interest rates. The banks’ loans margin fell to 1.70 per cent and the deposit margin increased to 0.75 per cent in the second quarter.

Bank's interest rate margin. Households and non-financial corporations. Q4 2001-Q2 2010

Interest rate on loans in banks and mortgage companies 2008Q2 - 2010Q2

Transfer of housing loans affects the interest rate statistics

Banks continue to transfer housing loans to mortgage companies. These loans are used as security for 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 because interest rates on loans secured by dwellings are usually lower than interest rates on other loans. From the 3r d quarter of 2008 to the 2n d quarter of 2010, the mortgage companies’ share of total loans from Norwegian financial institutions to the general public has increased from 18 to 32 per cent. The interest rate in mortgage companies is lower than in banks, and figures show that the difference between them has increased the last two years.

Still high and decreasing interest rate margin on loans to non-financial corporations

For the first time since the financial crisis started in the 3rd quarter of 2008, the interest rate margin on loans to households exceeds the interest rate on loans to non-financial corporations. Although the interest rate margin on loans to non-financial corporations is decreasing, it is still higher than it was before the financial turmoil.

Interest rates in financial corporations, 2009Q2 - 2010Q2
 
  30 June 2010 31 March 2010 31 December 2009 30 September 2009 30 June 2009 Changes in interest rates Share of loans
  Last quarter Last year 30 June 2010 31 March 2010
 
1. Total loans from banks 4.56 4.42 4.28 4.19 4.40 0.14 0.16 59.2 60.1
2. Total bank deposits 2.11 1.99 1.86 1.68 1.88 0.12 0.23    
3. Banks' interest rate margin (1-2) 2.45 2.43 2.42 2.51 2.52 0.03 -0.06    
                   
4. Lending rate, mortage companies 3.49 3.36 3.19 3.18 3.43 0.13 0.06 31.7 30.7
5. Lending rate, life insurance companies 3.79 3.83 3.73 3.69 3.93 -0.04 -0.14 1.5 1.4
6a. Lending rate, state lending institutions 2.76 2.72 2.70 3.11 4.20 0.04 -1.44 7.7 7.8
6b. Lending rate, state lending institutions exsclusive loans with zero interest rates in the Norwegian State Educational Loan Fund 3.21 3.16 3.08 3.65 4.86 0.05 -1.65 6.6 6.7
Total loans from financial corporations1 4.07 3.95 3.85 3.83 4.14 0.12 -0.07  100.0  100.0
                   
7.The Norwegian Public Service Pension Fund 2.49 2.25 2.02 2.26 3.28 0.24 -0.79    
                   
8. Nibor (3mnd. effective) 2.86 2.39 2.24 1.98 2.00 0.47 0.86    
Deposits margin (8 - 2) 0.75 0.40 0.38 0.30 0.12 0.35 0.63    
Loans margin (1 - 8) 1.70 2.03 2.04 2.21 2.40 -0.32 -0.69    
                   
Banks. Repayment loans with home mortgages 4.15 4.04 3.91 3.84 4.03 0.11 0.12 25.0 26.0
Banks. Credit loans with home mortgages 3.55 3.43 3.32 3.19 3.43 0.12 0.12 5.9 6.0
Banks. Loans margin repayment loans with home mortgages (9 - 8) 1.29 1.65 1.67 1.86 2.03        
Banks. Loans margin on credit loans with home mortgages 0.69 1.04 1.08 1.21 1.43 -0.35 -0.74    
                   
Mortgage companies. Repayment loans with home mortgages 3.65 3.56 3.39 3.37 3.60 0.09 0.05 15.8 15.1
Mortgage companies Credit loans with home mortgages 3.44 3.30 3.11 3.07 3.32 0.14 0.12 7.0 6.7
Mortgage companies. Loans margin repayment loans with home mortgages (9 - 8) 0.79 1.17 1.15 1.39 1.60        
Mortgage companies. Loans margin on credit loans with home mortgages 0.58 0.91 0.87 1.09 1.32        
Life insurance companiess. Repayment loans with home mortgages 3.62 3.64 3.50 3.50 3.83 -0.02 -0.21    
State lending institutions. Repayment loans with home mortgages 3.46 3.39 3.36 3.54 4.25 0.07 -0.79    
                   
Home mortgages from financial corporations 3.92 3.84 3.72 3.69 3.94 0.08 -0.02 43.9 44.3
Credit lines from financial corporations 3.49 3.36 3.23 3.14 3.39 0.13 0.10 13.0 12.8
Loans secured on dwellings from financial corporations 3.72 3.73 3.61 3.57 3.82 -0.01 -0.10 56.8 57.0
                   
Totale loans from banks and mortgage companies 4.19 4.06 3.95 3.90 4.14 0.14 0.06    
                   
Key policy rate2 2.00 1.75 1.75 1.25 1.25 0.25 0.75    
Overnight lending rate2 3.00 2.75 2.75 2.25 2.25 0.25 0.75    
 
  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.
1  Includes banks, mortgage companies, life insurance companies and state lending institutions. The Norwegian Public Service Pension Fund is not included.
2  Source:  Central bank of Norway.

Definitions and other important information:

The interest margin: the difference between banks’ average lending and deposit rates.

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.

About the statistics

As per the end of the 2n d quarter 2010 the interest rate statistics includes data from 150 banks, 28 mortgage companies, 6 life insurance companies, 3 state lending institutions and The Norwegian Public Service Pension Fund.

 

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