Home loan competition drives rates down

In June, a rarely seen rapid reduction was observed in the mortgage rates, as reported by bank portal Mybanker. The average housing loan interest rate fell to 5.2%, marking a drop of 0.9 percentage points from the previous month. This highlights fierce competition among banks, some of which are offering rates on housing loans lower than those on fixed-rate mortgage loans, despite the higher risks associated with the latter part of housing financing. Jens Hjarsbech, Chief Economist at Mybanker, notes this unusual situation reflects banks’ willingness to attract low-risk, strong customers. Additionally, the average rate for cooperative housing loans fell to 4.8%. This considerable reduction coincides with interest rate cuts by major central banks and banks’ efforts to lend out their sizeable deposit surpluses at reasonable rates and low risks.