Young home buyers in Tromsø call interest rate increases “unfortunate, difficult and expensive”.
– It feels good to own your own home. It’s very pretty. Renting is throwing money out the window, says Cecilie Holm (23), who is glad she was able to buy a home before interest rates went up.
On Thursday, Norges Bank raised the key interest rate by half a percentage point to 2.25 per cent, the highest in 10 years. The bank has announced further increases this year and next year.
– The interest rate increase makes it more difficult for many young people to get into the property market, says Holm.
Chief economist on the interest rate increases: – It will be a new everyday life for many
– Be careful with my money
Three weeks ago, she bought her first home, a block of flats of 34 square meters for three million kroner, right by the Tromsø bridge.
– That’s expensive. It’s not much you get for three million kroner, says Holm.
The banks’ housing interest rate will probably increase from the current level of around three per cent to 4.5 per cent during the next year. Several young home buyers tell iTromsø that the interest rate increase will be felt.
– It is unfortunate for us. It will be more expensive to own a home, says Holm.
She is a nursing student and has received help from her father to buy the home.
– I have taken account of interest rate increases. So it will be fine. I work alongside my studies as much as I can. I am very careful with my money, and do not spend anything on unnecessary things, says Holm.
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Norges Bank takes a darker view of the future. But the interest rate will continue to rise nonetheless.
NOK 2,500 more per month
Young home buyers in the establishment phase will often have lower wages and be more vulnerable to interest rate increases than other buyer groups.
In Tromsø, the average price so far this year is NOK 3.3 million for homes bought by young home buyers under the age of 25. This is shown in Tromsø’s review of housing sales so far this year.
An increase in the housing interest rate from 3 to 4.5 per cent increases the monthly loan cost by around NOK 2,500 for a loan of NOK three million.
Chief economist believes Norges Bank will settle for one more interest rate increase
– Interest rate increases are not good. It will be more expensive to live. There will be less money for other things, says Sigve Bratbak (24) from Tromsø.
He has saved up money together with his girlfriend and bought his first home two weeks ago, an apartment for NOK 3.9 million.
– It will be tough. But we have not taken out loans over our heads. We thought when we bought that we would have to put up with a slight increase in interest rates, says Bratbak, who is a machinist on Hurtigruten.
“It is very expensive”
All the young home buyers in Tromsø I speak to say that they have to cut expenses when mortgage rates rise.
– It is stupid for me that housing interest rates are increasing. It will be very expensive. I have to prioritize differently, says nurse Ingrid Varsi (23).
She bought a block of flats alone for NOK 3.5 million, and will receive several thousand NOK in increased expenses every month if the housing interest rate rises from 3 to 4.5 per cent.
Norges Bank raises interest rates to reduce consumption so that inflation is reduced. And the young home buyers in Tromsø have spoken to all want to reduce their own consumption.
– It will be tighter financially. I have to start saving on things, says Alexander Fremmegård, who recently bought a home in Tromsø and drives a truck for Tromsø’s municipal waste company Remix.
– I don’t think much of an interest rate increase. I wish it didn’t happen, but I can’t do anything about that, he adds.