For all banks that adjust interest rates, the difference between the effective and nominal interest rates becomes larger during the transition period to the new rate. Why is this?
The key difference is that the effective interest rate accounts for the future, while the nominal interest rate does not.
If you compare the nominal and effective rates during a period when a rate reduction has been announced, you'll notice that the effective rate is actually lower than the nominal rate.
Conversely, if you compare them during a period when a rate increase is announced, the effective rate will be higher than usual relative to the nominal rate. This happens at all banks.
Why Does This Happen?
When a rate increase is announced, you as a customer, are given six weeks notice before your monthly payment changes. However, even though you’re still paying the same amount as before during this transition period, the calculation of the effective interest rate adjusts upward immediately.
This is because the effective rate takes the entire loan term into account. It "sees" the upcoming rate change, while the nominal rate does not.
You’re not paying more than you should
You continue to pay the same amount as before until the change takes effect. However, the effective interest rate, calculated to provide a full picture of the loan over its entire term, adjusts to account for the future rate change that will occur in a few weeks.
What Does This Mean for You?
You can rest assured that during the period before the rate adjustment takes effect, you are not paying more interest than before, even though the effective rate appears higher. If you review your repayment plan, you'll see that your payments remain unchanged during the transition period, even though the effective rate is displayed as higher.
Automatically Lower Interest Rate
With automatically lower rates, we've put the negotiation phone in the museum. And there's no doubt that Bulder customers love automatic rate reductions. At Bulder, you'll never need to call us to negotiate the rate you deserve.
We have transparent price lists and offer the same rates to everyone. You can find our price list by clicking on Price List.
What are the benefits for me? 💡
✅ LTV under 50%? You get our best rate.
✅ You automatically receive the best rate available to you with us.
✅ No awkward haggling or negotiations with the bank.
✅ No need to request a new valuation to prove you deserve a better rate.
Did You Know?
Every month, hundreds of Bulder customers automatically receive a lower rate.
Our record month was March 2022, when nearly 900 customers qualified for a lower rate. 🥳
In 2021, 380 customers had their rates reduced two or more times within the year.
On average, customers saved approximately 23,000 NOK over the loan term due to automatic rate reductions.
In 2021, the total savings for customers amounted to 35 million NOK over the terms of their loans.
A customer starting at the highest rate tier (85% LTV) typically received their first automatic rate reduction within six months, based on 2021 property price trends.