Sweden Mortgage Rates Rise After Central Bank Rate Hike

Sweden's central bank Riksbank raised its key rate from 1.75 percent to 2 percent.

This is the first rate increase in more than two years.

The central bank warned that further rate hikes are likely in the coming year.

Handelsbanken, Swedbank, Länsförsäkringar, and SEB have raised flexible rates from 3.94 to 4.19 percent.

Other major lenders in Sweden are expected to follow with similar rate increases soon.

Many homeowners now wonder if they should switch to a fixed-term mortgage.

Fixed mortgage rates have been climbing steadily since last November.

Statistics Sweden shows five-year fixed rates reached 3.35 percent by late September.

However, floating rate mortgages remained cheaper at an average of 2.72 percent.

Three-month fixed rates averaged 3.04 percent at the end of September.

Mortgages fixed for one to five years averaged 3.39 percent.

Christina Sahlberg is an economist at mortgage lender Skandia.

She noted that current fixed rates are lower than peak levels in early 2024.

Fixing a loan can provide peace of mind for households needing budget certainty.

However, Sahlberg reminded borrowers that variable mortgages were historically cheaper over long periods.

Flexible mortgages currently make up about 80 percent of all Swedish home loans.

Borrowers can also fix part of their mortgage to balance certainty and risk.

Reported by The Local.