OP warns mortgage borrowers of increase in interest rates

OP Financial Group has reminded mortgage borrowers that the positive economic development is likely to lead to an increase in interest rates.

OP Financial Group has reminded mortgage borrowers that the positive economic development is likely to result in a rise in interest rates - writes helsinkitimes.fi.

The financial group forecasts that long-term interest rates may begin to creep up as early as this year as markets adjust their expectations to the plans of the European Central Bank (ECB). The ECB has indicated that it will consider raising interest rates after completing purchases under its asset purchase programme at the end of September.

Reijo Heiskanen, the chief economist at OP Financial Group, estimates that market expectations on interest rates are too conservative in light of the economic development.

“The day will come when mortgage borrowers will start thinking about how high the interest rates will rise and how they can cope with it. It’d be better to think about it now,” he was quoted as saying on Monday by Kauppalehti .

“Because long-term interest rates can rise rapidly, you should start protecting yourself against rising interest rates in the near future.”

Expectations on interest rates are indeed conservative. OP Financial Group, for example, forecasts in its latest economic outlook that the 12-month Euribor rate will not be raised to two per cent until 2016.

“Mortgage borrowers don’t have to lose any sleep over Euribor rates for the next couple of years. But [the rates] will be higher than now in two years’ time. You can easily see them being one percentage point higher,” said Heiskanen.

Aleksi Teivainen – HT

Photo: Roni Rekomaa – Lehtikuva

Source: Uusi Suomi

Read also more news of Finland here.

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