Some Educated Guesses for Norwegian Financial Market in 2012

One of the most questioned points about the new year is how the Norwegian central bank, Norges Bank's recent decision of raising its key interest rate would affect mortgage rates. As a parallel to this decision, the banks have raised mortgage rates slightly and a further increase in mortgage rates is predictable. On the other hand, the outlook for economic growth both internationally and in Norway weakened the likelihood of a sharp rise in mortgage rates, according to the experts.

They also warn the ones expecting decrease in house loans: Even if the Norges Bank may begin to raise its key interest rate gradually in autumn 2012, the mortgage rate will probably not approach to normal levels until the end of 2013. For the loan seekers who cannot decide between fixed or floating interest rates, Nordea's experts remind historically floating rates are more favorable over time than the fixed rate, however they add fixed rate is a good option for those who do not sleep well at night when rates are rising.

How will the problems in southern Europe and the United States affect the Norwegian economy?

As for the Norwegian economy's vulnerability to the improvements in Europe and the USA, the finacial experts notes the continuous serious crisis in the Eurozone contributes to the turbulence on the stock exchange, leads to a strong Norwegian Krone and causes several countries in southern Europe to have weak economic growth. As a result of weaker growth prospect, Norwegian export companies can experience weaker demand from abroad for their products and probably lower prices for their products; then workforce reductions can be expected.

On the other, they suggest Norwegian financial sector is generally solid and will withstand the turmoil in financial markets better than many banks in other countries.

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