Economic downturn hasn’t stopped Swedes from borrowing

Despite higher interest rates, rising prices, and signs of slowing economy, Swedes have yet to curb their borrowing habits, according to new statistics.

Economic downturn hasn't stopped Swedes from borrowing

In June of this year, Sweden’s four major banks (Swedbank, Handelsbanken, SEB and Nordea) loaned 6.25 billion kronor ($1.03 billion) for such things as housing purchases, private borrowing, and corporate loans, according to statistics from the Swedish Financial Supervisory Authority (Finansinspektionen – FI) compiled by the Dagens Nyheter (DN) newspaper.

The figure represents a 15.8 percent increase in lending from the previous year, a rate above the annual 4-15 percent growth rate which Sweden has had in recent years.

Experts are concerned that if the trend continues, Swedish consumers will find themselves squeezed by the rising cost of debt, which could then also further exacerbate problems in the overall economy.

“Despite that we are heading toward worse economic conditions and higher interest rates, there is no sign of a reduction in lending,” said Staffan Boström, an analyst at Finansinspektionen, to DN.

“Prices have increased for a long time, lending has increased for a long time, and now there is a risk that things will turn and credit losses may also start to increase.”

As in other parts of the world, increased lending in Sweden has been caused in large part by a steady rise in housing prices over the last few years.

While the rise in Swedish home values has leveled off, Boström points out that Sweden has so far escaped the kind of significant drop in real estate prices which has affected the United States and other parts of Europe.

But he adds that Swedish borrowers still have reason for concern.

“It’s quite likely that this effect is going to hit Sweden. Then lending will slow down,” he told DN.

According to Elisabeth Hedmark, an economist at the Länsförsäkringar banking and insurance group, part of the reason lending has yet to decrease may simply be that Swedes have yet to change their consumption habits.

“We’ve had extremely high consumption for awhile and it might be hard to adjust to new times,” she told DN.

Hedmark added, however that in general Swedes have sufficient financial buffers in place.

“But for those on the margins it’s important to review their expenses and see where they can make reductions.”


Swedish bank’s IT fault puts customer accounts in the red

A technical problem at Sweden's Swedbank on Thursday night gave customers a nasty surprise, with their account balances inexplicably going negative, payments impossible, and Swish payments no longer working.

Swedish bank's IT fault puts customer accounts in the red

By 11.30pm, more than 2,000 Swedbank customers had reported the fault to the site Downdetector, and the problem was still not solved by 17.00pm on Friday. 

“We have an ongoing IT disruption where certain customers see an incorrect balance on their accounts,” a message on the bank’s app read. “The reason is a planned update to our internal systems which went wrong. We apologise, of course, for that and are working as quickly as possible to fix the problem.” 

The Swish payment service has also been affected, with the service, which is owned collectively by Swedish banks, reporting on its site that there was a “technical disruption at Swedbank and Sparbank which might affect Swish payments from these banks”. 

Some Swedbank customers posted their negative account balances on Twitter, expressing shock at the incorrect figures. 

The disruption comes at the worst possible time for many Swedes. Many people are paid on the 25th of the month, meaning this Friday marks the start of the payday weekend. Many will have also scheduled their bill payments for this Friday. 

Marko Saric from Malmö saw his account balance drop by 1.2 million kronor, going half a million kronor into the red. 

“It’s just totally crazy,” he told SVT. “We were going to go out and shop for the weekend. It’s lovely weather and the kids want to go out, but we can’t use our card. We’ve got no cash. Everything is in the bank.” 

“You’re just completely blocked. Colleagues need to make emergency food parcels for you. It’s just crazy that something like this should happen.” 

In its statement, the bank assured customers that their money was “secure”, and that the bank still had the correct information on what their account balance should be. 

“Customers who feel that they have suffered economic damage as a result of the disruption should contact the bank,” the message said.