When will mortgage rates in Sweden reach their peak?
Mortgage rates are on the rise in Sweden, as the Riksbank seeks to tame inflation, and its rate increases are passed on to borrowers. But how far will they go and how long before they start to retreat again?
What has the Riksbank done with rates so far?
Sweden's central bank at the start of June announced its biggest hike in rates for 22 years, a double increase of 50 points to 0.75 percent, which will stay in place until September 20th, when the rate is expected to rise again, hitting 1.36 percent by the end of the year, and then be hiked further, hitting 2 percent in the last six months of 2025.
What has the rise in central bank rates done to mortgages in Sweden?
The state-owned mortgage company on July 25th increased its various mortgage rates by between 0. and 0.45 percentage points, with the rate on a three month variable rate mortgage rising 45 points to 2.97 percent, and a two-year fixed-rate mortgage by 25 points to 4.11 percent. The 45 points increase to the variable rate mortgage means it will cost the average borrower 1,126 kronor more a month.
At the end of July, Länsförsäkringar increased its rates on a three month variable loan by 0.50 percentage points to 3.54 percent, with its one year fixed-rate mortgage up 0.4 percentage points at 3.99 percent, and its five and ten year fixed rate mortgages unchanged at 4.24 percent and 4.7 percent respectively.
When will interest rates peak?
According to the state-run mortgage bank SBAB, the Riksbank will reduce its core interest rate after the summer back to two percent to reduce the negative impact of rate rises.
SBAB's variable rate mortgages are then expected to peak at 3.8 percent next summer, after which they will start to gradually decline.
Should I get a variable or a fixed rate mortgage?
According to SBAB, the time when a fixed rate mortgage could come with a lower rate than a variable rate mortgage is "definitely in the past".
"For fixed times of more than two years, it's now expensive to protect yourself against significant rises in variable rates," said the lender's chief economist Robert Boije in a press release. "That window looks like it's closed."
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What has the Riksbank done with rates so far?
Sweden's central bank at the start of June announced its biggest hike in rates for 22 years, a double increase of 50 points to 0.75 percent, which will stay in place until September 20th, when the rate is expected to rise again, hitting 1.36 percent by the end of the year, and then be hiked further, hitting 2 percent in the last six months of 2025.
What has the rise in central bank rates done to mortgages in Sweden?
The state-owned mortgage company on July 25th increased its various mortgage rates by between 0. and 0.45 percentage points, with the rate on a three month variable rate mortgage rising 45 points to 2.97 percent, and a two-year fixed-rate mortgage by 25 points to 4.11 percent. The 45 points increase to the variable rate mortgage means it will cost the average borrower 1,126 kronor more a month.
At the end of July, Länsförsäkringar increased its rates on a three month variable loan by 0.50 percentage points to 3.54 percent, with its one year fixed-rate mortgage up 0.4 percentage points at 3.99 percent, and its five and ten year fixed rate mortgages unchanged at 4.24 percent and 4.7 percent respectively.
When will interest rates peak?
According to the state-run mortgage bank SBAB, the Riksbank will reduce its core interest rate after the summer back to two percent to reduce the negative impact of rate rises.
SBAB's variable rate mortgages are then expected to peak at 3.8 percent next summer, after which they will start to gradually decline.
Should I get a variable or a fixed rate mortgage?
According to SBAB, the time when a fixed rate mortgage could come with a lower rate than a variable rate mortgage is "definitely in the past".
"For fixed times of more than two years, it's now expensive to protect yourself against significant rises in variable rates," said the lender's chief economist Robert Boije in a press release. "That window looks like it's closed."
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