Household loans in Sweden increased year-on-year in October, with housing loans accounting for 83% of the total household lending. The growth rate for housing loans slightly increased during the month to 1.1%. Meanwhile, the growth rate for non-financial companies remained unchanged at -1.7%.
In October, the average interest rate for variable-rate housing loans was 4.03%, down from 4.19% the previous month. Irina Wiman, an economist at SCB, noted, “We see that the average mortgage rates with terms from three months up to two years continue to decrease. At the same time, we see that the average mortgage rates with terms over two years are increasing in October.”
The interest rate on new agreements for household housing loans with terms between one and five years averaged 2.85%, significantly lower than the 4.61% rate in October of the previous year.
Nordea believes that longer-term mortgage rates may be close to bottoming out. The bank stated, “Longer-term rates are more influenced by global events than Swedish ones. Nordea’s forecast is that they may come down a bit more in the near future, but are fairly close to the bottom.” This suggests that it is advantageous to lock in the interest rate on mortgage loans, especially given the significant difference between the three-month and five-year mortgage rates.
The bank also advised that those considering fixing their mortgage loans may want to wait a little longer, especially if they are looking at the two-year rate. However, on paper, longer-term rates are likely to be more favorable.
Overall, the Swedish housing loan market is experiencing shifts in interest rates, influenced by both domestic and global factors. As borrowers navigate these changes, it is crucial to consider the best options for their financial well-being.