Swedens Policy Rate

Mortgage rates rise despite unchanged policy rate – how it affects your wallet

At the end of March, several major banks chose to raise their mortgage rates, even though the Riksbank decided on March 19 to leave the policy rate unchanged at 1.75 percent. This means that many households may face higher monthly costs for their mortgages, even though there has been no new interest rate announcement from the Riksbank.

What has happened?

• The Riksbank kept the policy rate unchanged at 1.75 percent at its March meeting.
• Several major banks still raised their mortgage rates between March 30 and 31.
• Banks refer to expectations of future rate hikes and increased costs to fund their loans as possible reasons.
• The Riksbank has noted the banks' actions and stated that this could influence their upcoming decisions regarding the policy rate.

Why does it matter?

This development means that mortgage rates do not necessarily follow the Riksbank's policy rate as directly as before. Instead, they are increasingly influenced by the banks' own assessments of future market risks and funding costs. For households, this means that mortgage costs can change even if the official policy rate remains stationary, which can make it more difficult to forecast household finances in the short term.

The banks' rate hikes can also be interpreted as a signal that there is a risk that the Riksbank may raise the policy rate sooner than expected, especially if inflationary pressure persists. Analysts have pointed out that rising oil prices and concerns about stagflation (high inflation combined with low growth) are affecting the entire interest rate climate.

How to think about mortgages, personal loans, and savings

• Mortgage: Check if your bank has raised your interest rate, even if you have not received information about a changed policy rate from the Riksbank.
• Personal loans: Interest rates on personal loans can also be affected by banks' general interest rate policies, so it is good to keep an eye on any changes.
• Savings: If interest rates on loans rise, this may eventually also affect interest rates on savings accounts, but this does not always happen as quickly.
• Daily finances: Expect that expenses for housing loans may increase suddenly, and try to maintain margins in your budget.

Things to consider when banks move ahead of the Riksbank

• The mortgage rate and the policy rate do not need to move in sync. Banks' own decisions can come before the Riksbank's announcements.
• Banks' rate hikes are often based on expectations of future costs, not solely on actual changes in the policy rate.
• It is uncertain exactly how and when the Riksbank will adjust the policy rate in the future, especially in a situation with inflation and concerns about low growth.
• Different banks may raise rates at different times and for different loan types – check what applies to your specific loan.

Conclusions for households and borrowers

The latest development shows that it has become more difficult to forecast mortgage costs solely by following the Riksbank's interest rate announcements. Banks' own assessments and market expectations are gaining greater importance, which can make it important to pay attention to banks' communications and changes in interest rate levels. Staying informed and maintaining margins in your finances can be an advantage as uncertainty increases regarding both inflation and interest rates.