"OP-Pohjola Group Central Cooperative's Executive Board decided on 6 May 2008 to raise OP-Pohjola Group's OP-prime reference rate from 4.25 per cent to 4.50 per cent, effective 20 May 2008.
The decision was based on the rising trend in market interest rates. The prime rate was last revised in June 2007."
How long would the other banks wait before raising their prime rates?
"One housing veteran once said to me, never trust or take the bank low prime rate. When the main ECB interest rates will start falling, banks will drag feet to lower it"
A report from Bank of Finland, clearly highlight the fact that the housing borrowers are looking for the cheapest alternative, thus switching from 12 month euribor (4.9%) to bank prime rates (4.25%).
"Euribor rates lost some of their popularity as reference rates used in new housing loan agreements in March.
The shift was mainly in favour of prime rates, the share of which has increased clearly.
In March, these two reference rates were used equally 48% in new housing loans."
I'm really wondering if a 0.5% can really make a difference??, if so then households are pretty highly leveraged which could explain why the saving rate has exploded in the past 6 months at a time where consumer confidence has plummeted.
I think a vast majority are still hoping that the housing will stabilize or at best follow inflation. That's most probably the reason why appetite for housing has not yet receded. Figures will show us that, a still healthy housing market, at least until end of the summer...
Symptoms have appeared in different forms, but no one can believe that a downturn could start ...
I stick to my prediction that company such as YIT, Ramirent are going to see their shares going back to 2003 level, a single digit level at around 3-4 euro.
These two companies are reflecting the housing bubble that has developped in the past 5 years as they show clear similarities as the nasdaq bubble or technology bubble...