Swedens Policy Rate

The Central Bank Maintains the Policy Rate at 3.75%: What Does It Mean for You?

Today, on June 28, 2024, the Central Bank announced that the policy rate, also known as the repo rate, remains unchanged at 3.75%. This decision comes after a period of stability where the rate has been kept constant since May 2024. But what does this mean for Swedish citizens in practice? Let's delve deeper into how this rate affects mortgage loans, personal loans, and the overall economy.

Historical Development of the Repo Rate

The repo rate has seen quite a bit of movement in recent years. Here is a quick overview of the last 24 months:

• 2024-06-01: 3.75%
• 2024-05-01: 3.75%
• 2024-04-01: 4%
• 2024-03-01: 4%
• 2024-02-01: 4%
• 2024-01-01: 4%
• 2023-12-01: 4%
• 2023-11-01: 4%
• 2023-10-01: 4%
• 2023-09-01: 4%
• 2023-08-01: 3.75%
• 2023-07-01: 3.75%
• 2023-06-01: 3.5%
• 2023-05-01: 3.5%
• 2023-04-01: 3%
• 2023-03-01: 3%
• 2023-02-01: 3%
• 2023-01-01: 2.5%
• 2022-12-01: 2.5%
• 2022-11-01: 2.5%
• 2022-10-01: 1.75%
• 2022-09-01: 1.75%
• 2022-08-01: 0.75%
• 2022-07-01: 0.75%

Mortgage Calculation: What Does Your Loan Cost Now?

With the current repo rate at 3.75% and an assumed bank markup of 1%, we can calculate the cost of mortgage loans for various amounts. Here is an overview:

Mortgage of 1 million SEK

• Interest Rate: 4.75%
• Monthly Cost (amortization + interest, 30 years): approx. 5,208 SEK

Mortgage of 3 million SEK

• Interest Rate: 4.75%
• Monthly Cost (amortization + interest, 30 years): approx. 15,625 SEK

Mortgage of 5 million SEK

• Interest Rate: 4.75%
• Monthly Cost (amortization + interest, 30 years): approx. 26,042 SEK

Personal Loans: What Can You Expect?

For personal loans, with an assumed markup of 2%, the interest rate becomes 5.75%. This means higher monthly costs compared to mortgage loans. If we continue to see a declining inflation rate, as we have in recent months, we can expect the Central Bank to possibly lower the rate in the future. However, if inflation starts to rise again, a rate hike could be likely.

Inflation Development and Forecast

Inflation has been a key factor in the Central Bank's decision to keep the rate unchanged. Here is an overview of the inflation development (KPIF) in recent months:

• 2024-05-01: 2.3%
• 2024-04-01: 2.3%
• 2024-03-01: 2.2%
• 2024-02-01: 2.5%
• 2024-01-01: 3.3%
• 2023-12-01: 2.3%
• 2023-11-01: 3.6%
• 2023-10-01: 4.2%
• 2023-09-01: 4%
• 2023-08-01: 4.7%
• 2023-07-01: 6.4%
• 2023-06-01: 6.4%
• 2023-05-01: 6.7%
• 2023-04-01: 7.6%
• 2023-03-01: 8%
• 2023-02-01: 9.4%
• 2023-01-01: 9.3%
• 2022-12-01: 10.2%
• 2022-11-01: 9.5%
• 2022-10-01: 9.3%
• 2022-09-01: 9.7%
• 2022-08-01: 9%
• 2022-07-01: 8%
• 2022-06-01: 8.5%

Impact on Food Prices, Fuel Prices, and Energy Prices

Food prices, fuel prices, and energy prices are closely linked to inflation. With the current stability in inflation, we can expect these prices to stabilize as well. However, external factors such as geopolitical instability and weather conditions can influence these prices.

Summary

The Central Bank's decision to maintain the policy rate at 3.75% means that loan costs remain stable for the time being. With continued low inflation, we can expect the rate to stay unchanged or even decrease in the future. This is good news for borrowers, but it is important to keep an eye on inflation trends and the Central Bank's future decisions.