The Riksbank’s key interest rate remains at 2.25%. Susanne Spector, the chief economist at Danske Bank, predicts that mortgage rates will stay at the current levels. She explains that the variable mortgage rate closely follows the actual repo rate, and if there are no further rate cuts, we may have reached the bottom for variable rates. However, there could be a slight decrease if there is another rate reduction.
In contrast, longer mortgage rates are more influenced by market rates. Spector notes that long-term market rates have risen in Sweden and Europe due to expectations of increased borrowing. This trend suggests that defense spending and investments in Europe are likely to increase, leading to further rises in long-term rates. As a result, fixed mortgage rates are unlikely to decrease.
Since the Riksbank began raising rates in 2022, many housing associations have faced higher loan costs, leading to increased fees for residents. Spector believes that if a housing association has already raised fees, the largest increases are likely behind them. However, she forecasts that fees for housing associations will rise more than historically seen this year, reflecting the current economic environment.
Danske Bank’s forecast predicts a 5% annual increase in housing prices. However, recent data shows a downturn in prices, with declines in January and February. Spector suggests that this correction may continue as the market adjusts to the reality of a 2.25% interest rate floor. The previous year’s price growth may have been driven by expectations of further rate cuts, leading to the current correction.
Overall, Spector’s analysis paints a picture of a housing market grappling with the implications of stable interest rates and potential economic shifts. As the landscape evolves, homeowners, investors, and policymakers will need to navigate these challenges to ensure the stability and growth of the housing sector.