Swedens Policy Rate

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

On March 19, the Riksbank chose to leave the policy rate unchanged. Shortly after the announcement, several banks have nevertheless raised their mortgage rates. Many households are now noticing that the monthly cost of both mortgages and personal loans may increase, even though the policy rate itself has not changed. This development can make it more challenging to plan for both borrowing and saving.

What has happened?

• The policy rate has remained unchanged since March 19 according to the Riksbank's latest announcement.
• Nevertheless, banks have raised their mortgage rates during late March.
• Both the Riksbank and several analysts point to an uncertain future, particularly regarding inflation and oil prices.
• The Riksbank has warned that a series of rate hikes could become necessary if inflation picks up.
• Experts highlight that banks are acting based on their own expectations of future costs and risks, not solely on today's policy rate.

Why does this matter to you?

When banks raise mortgage rates, your interest costs may increase, even if the Riksbank has not changed its policy rate. This means households could face higher monthly costs without any new announcement from the central bank. Concerns about inflation and rising oil prices lead banks to see a risk of higher financing costs ahead, which they factor into their decisions according to several assessors.

For you with a mortgage or personal loan, this means you can be affected by banks' actions even when the policy rate is unchanged. If you save in a savings account, it may take some time before banks raise savings rates at the same pace as loan rates, which affects the return on your savings.

How should you think about mortgages, personal loans, and savings?

• The mortgage rate is not determined solely by today's policy rate – banks' expectations of future inflation and costs are of great importance.
• It may be wise to follow the development of rates at your specific bank, as increases can occur at different times and with varying magnitudes depending on the bank and loan type.
• Uncertainty surrounding inflation and the Riksbank's future decisions makes it harder than usual to predict how interest rates will develop in the long term.
• If you are planning to take out new loans, it may be worth considering that the interest rate environment is volatile and can change quickly, but there are no guarantees regarding whether or when the Riksbank will change its policy rate.
• For savings in a savings account, it may take longer for higher mortgage rates to result in higher savings rates. Compare offers from different banks to find the best terms.

What to keep an eye on going forward

• The Riksbank has emphasized that the forecast is highly uncertain and that they may either raise or lower the rate depending on how inflation develops.
• Banks' interest rate setting can change rapidly, even without a change in the Riksbank's policy rate.
• It is important not to confuse the policy rate and the mortgage rate – they are influenced by different factors and do not always develop in parallel.
• Several experts point out that new rate hikes could become relevant if inflation increases, but there are no clear announcements regarding when or if this will happen.

In summary, uncertainty surrounding inflation and future interest rate announcements is creating a volatile interest rate market. Households may need to be prepared for both loan and savings rates to change, regardless of what the Riksbank does with the policy rate right now.