The interest rate on a mortgage can be increased. The customer must find out that this has happened.
– Our interest on the loans was raised and became much worse, without the bank notifying us, says Bo Benckert, mortgage borrower in Stockholm.
Anyone who takes out a mortgage must negotiate the interest rate on the loan with their bank. The banks call it giving a discount – an interest rate of 5 percent can become 4 after a negotiation, for example. But the discount is usually only valid for one year, after which the interest rate can tick up to what the banks call “list rate”.
A lot of customers continue to pay the loans casually and do not think that the discount has expired and that the cost of the mortgage has gone up.
Thus, they miss the chance to contact the bank and try to get the same low interest rate as before, or change banks to get better terms. And it can be about thousands of dollars ticking away, month after month, completely unnecessarily.
Own responsibility
Customers obviously have their own responsibility, says mortgage customer Bo Benckert, but he also believes that the banks should get in touch. He compares it to how telecommunications companies work.
– When they raise their prices, they send some email, snarky perhaps, but still.
SVT has applied to the four major banks, but no one wants to be interviewed on television.
Now the Financial Supervisory Authority will force the banks to inform in good time that the discount is about to expire. The message must be easy to read and concrete with information in kroner about how much more expensive the loan will be when the discount expires.
New rule within a year
The new rule could become a reality within a year and will be part of a larger review that the Financial Supervisory Authority is working on.
The change is needed, not least to help people who have financial difficulties, according to FI. About a quarter of Swedes have very poor financial knowledge, according to the authority’s studies.
– Many mortgage customers think that financial services are boring and difficult and you don’t understand why you get a certain mortgage interest rate and not how long the discount that you negotiated is valid for. The banks need to do more here, says Moa Langemark, consumer protection economist at the Swedish Financial Supervisory Authority.
Hear Björn Benckert’s story in the clip above.