Swedens Policy Rate

Mortgage rates rise despite unchanged policy rate – what does it mean for households?

On March 19, the Riksbank decided to leave the policy rate unchanged at 1.75 percent. Despite this, several banks raised their mortgage rates during late March and early April. This means that many households may see their housing costs increase, even though the official rate from the Riksbank has not changed.

What is behind the banks' rate hikes?

Economic experts and analysts emphasize that banks do not set their mortgage rates solely based on the Riksbank's current policy rate level. Instead, interest rate setting is influenced by several factors, including:

• Market expectations: Banks take into account expectations regarding future interest rate levels. If the market believes that rates will rise in the long term, banks may adjust their rates in advance.
• Margins and funding costs: If it becomes more expensive for banks to borrow money on the market, they may raise mortgage rates to adapt to the new conditions.
• Inflation concerns: Recent concerns that inflation will remain at a high level, or that Sweden risks stagflation (high inflation and weak growth), have made banks more cautious.

Sources indicate that the banks' actions can be seen as a reaction to an uncertain external environment, rather than a direct response to the Riksbank's decision.

How the new mortgage rates affect your finances

The fact that banks are raising mortgage rates despite an unchanged policy rate makes it harder for households to predict their future costs. The monthly cost of a mortgage can increase even if there is no new interest rate announcement from the Riksbank. This means that mortgage borrowers need to follow both the banks' and the Riksbank's announcements, as they do not always develop at the same pace.

• If you have a mortgage, it may be wise to check if your interest rate has changed and how it affects your finances.
• For those with personal loans, similar principles apply, as these rates are often adjusted based on market expectations.
• For savers, higher mortgage rates can sometimes lead to higher savings rates, but this is not guaranteed and often occurs with a delay.

It is important to distinguish between the policy rate and the mortgage rate. The policy rate is a tool to control inflation in the economy, but banks' own rates are also influenced by other factors and can change independently of the Riksbank's decisions.

How should you plan ahead?

Since banks' rates are influenced by both expectations and actual costs, mortgage rates can change even without new interest rate announcements from the Riksbank. For households with loans, it is important to follow information from their own banks and be aware that costs may change, even if the policy rate remains unchanged.

There are no exact figures on how much mortgage rates have risen recently – it varies between different banks and loan types. To get a clear picture of your own situation, you therefore need to check the current terms with your bank.

The uncertainty surrounding inflation and economic development means that both borrowers and savers may need to be extra vigilant in the future. It may be wise to create margins in your finances and not assume that today's interest rate environment will automatically apply to the future.