Another interest rate cut is on the way from the European Central Bank, and it will have an impact on F-card borrowers.
According to economists, much will have to change if the European Central Bank does not lower its deposit rate by another 0.25 percentage points on Thursday, so that it will be called 2.0 percent in the future.
It should be just as certain that the Nationalbank will follow suit shortly afterwards and lower its key interest rate.
Because it is expected to happen, the interest rate cut itself will not move the financial markets very much, but it will have an impact on a specific group of homeowners.
This concerns the approximately 300,000 people who have a mortgage whose interest rate depends on the so-called Cita 6 interest rate, and who receive a new interest rate every six months.
They will already notice the lower interest rate in the next installment, says Brian Friis Helmer, a private economist at Arbejdernes Landsbank.
“Currently, it looks like the interest rate could be shaved off by around 0.6 percentage points compared to the last interest rate setting at the turn of the year,” he says:
“This will mean savings of up to 400 kroner per month after tax per million borrowed, which comes on top of the reduction in benefits that occurred at the turn of the year.”
If interest rates are cut as expected, it will be the eighth time in a year that this has happened. The question is whether the rate cuts will continue from here.
“It is not inconceivable that the ECB will press the interest rate button several times in the autumn, which could then send the F-card interest rate down a little further, but in our opinion we do not see a huge interest rate drop from here,” says Brian Friis Helmer.
On Tuesday, new figures were released for inflation in the countries that use the euro as their currency.
They showed that in April it had fallen to 1.9 percent and thus appears to have stabilized around the 2 percent, which is the ECB’s long-term target.
Interest rates were raised at the time precisely to bring inflation, which rose sharply in the fall of 2022, under control. Higher interest rates dampen demand, which in turn dampens inflation.
After inflation has fallen again, the ECB has lowered interest rates again to ensure that the European economy does not come to a standstill.
The balancing act consists of not lowering interest rates so much that demand increases to the point that prices begin to rise again.
But because interest rate changes can often take many months to take effect, central banks often play a bit blind when making interest rate decisions.
ritzau
