Mortgage loans are too expensive. If you do nothing, you pay too much for your mortgage. Better rules should ensure real competition for mortgage credit.
What will you do if Brugsen puts the price up with 20% on all goods? What do you do if Shell deliberately sets its prices 10% higher than its competitors? You’ll find another place to buy milk, bread and gasoline – right?
But when Nykredit put up mortgage loans in the spring, the Danes did not react – at least not so far. In fact, figures show that Nykredit has increased their market share! Danish consumers have not fled from Nykredit despite poor media coverage and a management that deliberately aims to raise the price of many products. Nykredit’s products have become considerably more expensive than the cheapest in the market.
Lack of competition on mortgage credit
Much indicates that the mortgage credit market is too opaque for ordinary Danish families. It’s too hard to find out where to go to find a cheaper loan. This is partly because the financial products may seem complicated. But it also has to do with the lack of confidence that cheap products will remain cheap. There is no guarantee that the companies will not only raise prices again in six months.
It seems that customers have abandoned the mortgage companies. It does not last long, it is important that you as a customer respond to unreasonable prices. Most customers who get raised their mortgage rates can find cheaper alternatives elsewhere. This is especially true of customers in Nykredit and Realkredit Danmark, who have announced higher prices.
The contribution rates are rising – can you do anything?
The power of consumers
Both Nordea Kredit and BRF are trying to hijack new customers in the market, but that requires you to take the plunge. The only thing that can make financial companies change course is when customers go their way.
It became very clear when Danske Bank tried a new fee structure some years ago. It went really wrong and they had to say that customers actually have power when enough people respond and go to other providers.
Too few providers?
There are too few providers in the mortgage market for the necessary competition to arise between the companies in favor of consumers. It is too difficult to change the mortgage company with a loan of over 80%, and this prevents real competition in the framework of the loans. For example, there is not a single company that offers loans where the contribution rate cannot be raised after the loan is given.
What does it cost to change a mortgage company?
New rules must ensure competition
The Competition Authority should tell the Minister that the rules on the mortgage credit area are insufficient to ensure competition in the market. At present, it is the companies themselves and not the market that sets the price.
If the price of your mortgage is set up, you should do something about it. Examine your options for changing company. Can you get a cheaper loan somewhere else, so don’t hesitate to move your loan to the cheapest company.