Mortgage rates..just an idea

Cod · Post by **Cod** » Thu Apr 24, 2008 10:48 pm

..is it just me or does it make sense to take a Nordea Prime rate as the interest rates rise then a 3kk Euribor on the falling rate. There seems to be consitently half a percentage between them (in favour or against the debtor depending on how its being played) in times like these.. just wondering if anyone has any thoughts on this..

**Sponsor:**

raamv · Post by **raamv** » Fri Apr 25, 2008 12:08 am

depends. They make more € on 3KK Euribor as the margins that they charge are pretty high ( Highest of all the banks ). They also make the most of the 12KK Euribor.
On top of those, they make more in charges that they levy for all those fancy "services" that they think they provide.
House loans are safer with 12KK euribor and personal loans are better off with 3KK.

Rosamunda · Post by **Rosamunda** » Fri Apr 25, 2008 12:09 am

Logic sounds fine but.... OK suppose I want a mortgage NOW : Are interest rates rising or falling? And for how long? Rising for another year then falling for two or three.

Maybe you missed out the crystal ball x factor in your equation.

Opting out of a mortgage usually involves penalties and charges. So any short term gain in the interest rate would be off-set by the cost of renegotiating a new loan. No?

And I don't think Nordea is any different to the other banks. They all adjust their mortgage rates quarterly and re-align them to the Euribor (or not).

raamv · Post by **raamv** » Fri Apr 25, 2008 12:33 am

penelope wrote:Logic sounds fine but.... OK suppose I want a mortgage NOW : Are interest rates rising or falling? And for how long? Rising for another year then falling for two or three.

Maybe you missed out the crystal ball x factor in your equation.

Opting out of a mortgage usually involves penalties and charges. So any short term gain in the interest rate would be off-set by the cost of renegotiating a new loan. No?

And I don't think Nordea is any different to the other banks. They all adjust their mortgage rates quarterly and re-align them to the Euribor (or not).

Interest rates are being steady now.. They will fall once inflation is tames in the EU zone... ( I was expecting it to fall last month but the bloody inflation rate shot up bcos of food n gas prices

)
So if you take a 12kk Euribor, you pay 12kk rate at time of loan+ margin for 1 year. after which it is adjusted to the rate at that time of the year.
EU zone has a lot of influx of cash now bcos of the interest rates. Once inflation subsides the EU bank ll be forced to cut rates asap ( It take around 2-3 quarters to interest rate reduction to see an increase in borrowing thereby boosting the economy).
Well, Generally with a mortgage, it is always wise to take the mortgage insurance/valtion takaus/veron takaus that also covers unemployment ( helps in this kinda situation when jobs ll be axed ). Sure you pay a little premium but then when you pay the whole mortgage money back ( no penalties if you take this insurance and your whole mortgage insurance premium ll be returned to you).
Its generally good to adjust mortgages every 2 years ( as tax consequences are there ).
The 3kk Euribor for house loan is a tricky one and one needs to always be ready to switch loans when they see the patterns of rising interest rates. If you are that..then it ll work out good for you.or if you are planning to sell the house soon..then its possible that you can really make some € with it.. apart from that it poses risk of interest rate increase with drastic monthly payments.
Nordea adjusts to any banks, but the margins they charge is the highest in the Nordic countries.

This news from yle was archived but not there in their pages anymore

Significant Differences in Credit Card Costs
Published 18.04.2008, 11.42
Image: YLE

There are significant differences in the costs associated with credit cards. Annual fees for credit cards can vary by up to 35 percent depending on the bank or financial institution offering them. Finns with credit cards are paying hundreds of euros in credit card fees annually.

The Finnish credit card payment company Luottokunta estimates that there are nearly as many credit cards as there are people living in Finland - roughly 5 million.

The use of credit cards has increased by about 10 percent each year since 2000 and this year credit card payments are expected to top six billion euros.

YLE asked six Finnish banks to estimate the real annual interest rate paid on credit cards. The real rate includes all costs incurred by the cardholder, including the reference rate, the bank's marginal rate of interest and other costs such as billing and annual fees. The banks were asked to base their calculations on a hypothetical card with a 4,000 euro limit.

By far the cheapest annual rate was given by the Mortgage Society of Finland (Hypo) which specialises in housing loans. Hypo's annual real rate of interest amounted to 9.9 percent. Hypo also offers customers the lowest marginal rate, at 5 percent, charges no annual fee, and the only extra payment is a two euro billing fee.

All the banks based their calculations on a three-month euribor interest rate. The survey revealed that while Hypo offered the lowest marginal rate, Nordea's rate was the highest, at 7.5 percent - others fell between the two extremes. Nordea also turned in the most expensive estimate for the real annual rate charged on a 4,000 euro credit card - 13.4 percent.

Annual Costs up to 450 Euros

Suomen Rahatieto is an independent organisation that offers financial information to households and small businesses. It says that singles are paying between 200 and 300 euros in annual costs, while 50-year old couples are spending up to 450 euros each year.

In the survey, the difference between the lowest and highest annual costs quoted for the hypothetical 400 euro credit card used in the survey ran up to 140 euros a year.

The other institutions contacted for the survey included Aktia Savings Bank, OP Bank in Helsinki and Tampere, Tapiola Bank and Sampo Bank.

On average the real annual interest rate charged on credit cards fell between 11 and 12 percent. Consumers could save roughly 35 percent on costs by switching their credit card business from the most expensive to the cheapest institution.

The financial institutions also acknowledged the difference between the interest rates applied to credit cards and to regular consumer loans. Within the same bank, the difference between rates for consumer credit and credit cards varied by up to six percent.

Rosamunda · Post by **Rosamunda** » Fri Apr 25, 2008 1:00 am

Yes but... I don't know many people who have bought a house on their VISA card

raamv · Post by **raamv** » Fri Apr 25, 2008 1:03 am

Well, Ask the loan officers what kind of plan they use and you ll be surprised.. ( as I was and so now I know many who are actually having their house loan in the 3kk Euribor)..
The interest on credit cards are different...They are way over 6-7% and not connected directly with the Euribor ( unless they have some kind of promotional stuff that they then change it to regular back-stab rates later)

debonaire · Post by **debonaire** » Fri Apr 25, 2008 11:31 am

Well I don't know about the credit cards as i don't have to pay any annual charge and the interest rate on credit cards don't concern me much as I make it a point to pay back the credit within the interest free period...
Concerning the house loan, I opted for Nordea Prime rate when I took the housing loan 6 months ago as that time 12 kk Euribor was hovering around 4.7%-4.8%...where as the Nordea Prime rate was 4.25% with a margin of 0.45%...So the effective rate was 4.7%...Till date they haven't changed their prime rate and I am hoping it to go down in a month or two...Had I taken the house loan at 12 kk euribor I would have been paying at an effective rate of 5.2%-5.3%...So i guess I made an economically sensible decision(so far)...
Moreover,I like their MasterCard Gold, as not only it doesn't have any annual fee but also it covers for my kid's and my travel insurance without any extra cost...

debonaire · Post by **debonaire** » Fri Apr 25, 2008 11:31 am

double post

Rosamunda · Post by **Rosamunda** » Fri Apr 25, 2008 6:51 pm

raamv wrote: The interest on credit cards are different...They are way over 6-7% and not connected directly with the Euribor ( unless they have some kind of promotional stuff that they then change it to regular back-stab rates later)

Yes I know they are different, I just don't get why you posted the article about the credit cards??? It doesn't have anything to do with mortgages. OK it's Friday.

Karhunkoski · Post by **Karhunkoski** » Sat Apr 26, 2008 2:13 pm

If you look at the historical figures since EURIBOR began, the best bet in the long term has been the 1 month EURIBOR, then the 3 month, and finally the 12.

12 gives some comfort (you know your payments for the next 12), however in the long term it seems you pay for this comfort factor.

In summary, looking at past figures, and assuming you have enough income cushion to ride the variations, 1kk EURIBOR could well be the best option for a house loan.

There is a site where some guy in Finland analysed the EURIBOR since introduction. It's good reading if you can find it. Oh I think much of it is in English too.

raamv · Post by **raamv** » Thu May 01, 2008 1:05 am

Yea though this is the first time that the EU is facing >5% inflation!!

Karhunkoski · Post by **Karhunkoski** » Thu May 01, 2008 8:43 am

Eurozone inflation hit a high of 3,6% in March and then dipped in April.

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