The list rate is the rate that the bank markets as the starting price. The average rate reveals what rate the bank's customers actually got.
To compare different offers, the Financial Supervisory Authority (FI) urges consumers to compare their rate with the average rate, not the list rate.
Should list rates disappear or even be prohibited?
We looked at that question last year and landed on not advocating a ban, but rather that banks should be forced by law to display the average rate in a clearer way, says Moa Langemark, consumer protection economist at FI.
How?
Partly when receiving a rate offer as a customer and partly during the loan period when changes are made to the loan terms and at least once a year for loans with variable rates.
Large differences
The problem today is, according to Langemark, large differences between different banks when it comes to how transparently they report the rate. The requirement is that the average rate should be reported, but not specifically in connection with the negotiations, and sometimes the information can be hard to find. For consumers, it becomes more complicated than it needs to be.
What is your tip to consumers?
Find out the average rate and your loan-to-value ratio. If the loan-to-value ratio is reasonable and you have a good income, it means a lower risk for the bank, which justifies a rate at or below average.
Also, compare the average rates of different banks and see what you can get elsewhere. Switch banks if you're not satisfied.
More profitable
Fixed or variable rate?
Historically, it has been more profitable to keep mortgage rates variable. But if you want to fix for more predictability, it's good to think about that different loan periods can make it harder to keep track of which discounts you have and when they expire.
Moa Langemark thinks that banks generally could improve on informing about when discounts expire. The authority is also working on a recommendation – a general guideline – to banks regarding this.
Our image is that they make it a bit more complicated for consumers than it needs to be, she says.
