'I'm holding out for some relief': High interest rates hit foreigners in Sweden
Many foreigners living in Sweden bought their houses or apartments recently, closer to the market peak. The Local spoke to some of them about how recent hikes in interest rates have hit their finances.
Renata Matošina, from Croatia, Nonó Gőbel, from Hungary, Attiqe Rehman, from Pakistan, andHeather from the UK, and all bought their properties in 2021 and 2022, close to the peak of the market but before most people had realised where interest rates were headed.
Today, it's clear that the calculations most of them made about their home's affordability were well off the mark.
"I feel fucked," Matošina, who bought in March 2022, complained. "The prices of the properties went down and interest rates went up. Our initial costs of new home went up 50 percent in just eight months!"
She and her husband took out a loan of 1.8 million kronor to buy an apartment for 2.1 million kronor. The apartment is now valued at 1.7 million. They are already in negative equity.
"It's hard not to feel cheated," she told The Local. "I bought a ticket, but I missed the train, like everyone was riding on 1.5 percent, 1.7 percent [mortgage rates]. And we jumped on that train."
Renata Matosina and her husband have seen their housing costs double in just eight months. Photo: Private
Nonó Gőbel, from Budapest, who bought in May 2021, has seen her mortgage payments nearly double from about 5,000 kronor to about 9,000 kronor over the past year.
"I’ve been wondering for months if we’re doing something wrong – more specifically, if us being foreigners means there’s some secret financial hack we’re not aware of," she says. "But judging from other people’s comments, everyone’s in the same boat."
Heather, who has to pay her mortgage out of a single income, says that she feels "trapped" by the sudden rise in costs.
"I feel I’m just about managing month to month and things are only going to get tougher… yet selling to downgrade doesn’t feel like a smart option either due to the falling property prices," she told The Local.
Only one of the readers we spoke to, Attiqe Rehman, from Pakistan, decided to get a fixed-rate mortgage, getting a five-year deal when he bought his house in Hörby, 30 minutes outside Malmö, back in November 2019.
"Thank goodness, at the time I fixed the interest rate at 1.6 percent for five years. One of the smartest decisions I made," he said. "For me, it was important that I know how much I was spending each month, and with that I knew it was always under 3,000 kronor or something."
At the time, a variable rate mortgage was only slightly cheaper, at about 1.3-1.4 percent, he added.
He said he hoped that by the time his mortgage runs out at the end of 2024, rates will have fallen somewhat .
"I do hope that by that time, it goes down. But from what I'm hearing, in the old times it was quite a lot higher, but let's see."
Attiqe Rehman was lucky enough to take out a five-year fixed rate mortgage. Photo: Private
For Matošina, what makes it especially painful is how much her other costs have gone up.
"We had aimed to buy an apartment with a low avgift [monthly fee] to lower our costs, but all of a sudden the avgift went up by 15 percent at our BRF [housing association], and then the electricity price went up 300 percent."
"Are we stupid, that we are making such a bad choices?" she asked. "Because everything went up in a really short amount of time, and I don't want to even talk about inflation."
Gőbel suspects that foreigners from some countries may take greater financial risks than born and bred Swedes.
"Someone born and raised in Stockholm probably leaves larger margins in their monthly budget than, for example, someone from Eastern Europe, who’ve grown up with inherently tighter budgets and often apply the same model to their lives in Sweden," she said. "Which means they feel the effects of these financial decisions sooner or more intensely."
What remedies are people taking?
Gőbel and her husband have been trying to eat less expensive meat, buy less clothes, and have reduced their travelling and holidays. She is a freelancer and is considering going back to a 9-to-5 job.
"We haven't taken any drastic measures yet," she said. "We're not cutting back on stuff that the kids like – swimming lessons and stuff like that – until we absolutely have to."
Matošina wants to renegotiate her mortgage with another bank. The rate she and her husband are paying Nordea is now close to 5 percent, but because they are in negative equity, she believes it is impossible right now to shift the mortgage over to a bank with better rates.
"Banks don't want to do business with us, so we are stuck with Nordea, who I think have one of the highest interest rates."
Her husband is now considering selling a house he owns in Croatia to bring down their mortgage and take them out of negative equity so they are free to shop around for a better deal.
Gőbel admitted she was "holding out for some relief, however naive that may be".
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Renata Matošina, from Croatia, Nonó Gőbel, from Hungary, Attiqe Rehman, from Pakistan, andHeather from the UK, and all bought their properties in 2021 and 2022, close to the peak of the market but before most people had realised where interest rates were headed.
Today, it's clear that the calculations most of them made about their home's affordability were well off the mark.
"I feel fucked," Matošina, who bought in March 2022, complained. "The prices of the properties went down and interest rates went up. Our initial costs of new home went up 50 percent in just eight months!"
She and her husband took out a loan of 1.8 million kronor to buy an apartment for 2.1 million kronor. The apartment is now valued at 1.7 million. They are already in negative equity.
"It's hard not to feel cheated," she told The Local. "I bought a ticket, but I missed the train, like everyone was riding on 1.5 percent, 1.7 percent [mortgage rates]. And we jumped on that train."
Nonó Gőbel, from Budapest, who bought in May 2021, has seen her mortgage payments nearly double from about 5,000 kronor to about 9,000 kronor over the past year.
"I’ve been wondering for months if we’re doing something wrong – more specifically, if us being foreigners means there’s some secret financial hack we’re not aware of," she says. "But judging from other people’s comments, everyone’s in the same boat."
Heather, who has to pay her mortgage out of a single income, says that she feels "trapped" by the sudden rise in costs.
"I feel I’m just about managing month to month and things are only going to get tougher… yet selling to downgrade doesn’t feel like a smart option either due to the falling property prices," she told The Local.
Only one of the readers we spoke to, Attiqe Rehman, from Pakistan, decided to get a fixed-rate mortgage, getting a five-year deal when he bought his house in Hörby, 30 minutes outside Malmö, back in November 2019.
"Thank goodness, at the time I fixed the interest rate at 1.6 percent for five years. One of the smartest decisions I made," he said. "For me, it was important that I know how much I was spending each month, and with that I knew it was always under 3,000 kronor or something."
At the time, a variable rate mortgage was only slightly cheaper, at about 1.3-1.4 percent, he added.
He said he hoped that by the time his mortgage runs out at the end of 2024, rates will have fallen somewhat .
"I do hope that by that time, it goes down. But from what I'm hearing, in the old times it was quite a lot higher, but let's see."
For Matošina, what makes it especially painful is how much her other costs have gone up.
"We had aimed to buy an apartment with a low avgift [monthly fee] to lower our costs, but all of a sudden the avgift went up by 15 percent at our BRF [housing association], and then the electricity price went up 300 percent."
"Are we stupid, that we are making such a bad choices?" she asked. "Because everything went up in a really short amount of time, and I don't want to even talk about inflation."
Gőbel suspects that foreigners from some countries may take greater financial risks than born and bred Swedes.
"Someone born and raised in Stockholm probably leaves larger margins in their monthly budget than, for example, someone from Eastern Europe, who’ve grown up with inherently tighter budgets and often apply the same model to their lives in Sweden," she said. "Which means they feel the effects of these financial decisions sooner or more intensely."
What remedies are people taking?
Gőbel and her husband have been trying to eat less expensive meat, buy less clothes, and have reduced their travelling and holidays. She is a freelancer and is considering going back to a 9-to-5 job.
"We haven't taken any drastic measures yet," she said. "We're not cutting back on stuff that the kids like – swimming lessons and stuff like that – until we absolutely have to."
Matošina wants to renegotiate her mortgage with another bank. The rate she and her husband are paying Nordea is now close to 5 percent, but because they are in negative equity, she believes it is impossible right now to shift the mortgage over to a bank with better rates.
"Banks don't want to do business with us, so we are stuck with Nordea, who I think have one of the highest interest rates."
Her husband is now considering selling a house he owns in Croatia to bring down their mortgage and take them out of negative equity so they are free to shop around for a better deal.
Gőbel admitted she was "holding out for some relief, however naive that may be".
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