The Swedish Housing Finance Corporation (SBAB) believes that the Swedish Central Bank will lower the repo rate by a further 50 points during the spring, down to two percent – and that it will then remain there.
We see no reason to go below that, as we currently assess the situation, says Robert Boije, chief economist at SBAB.
However, the risk picture exists – and goes in different directions. If growth does not take off, the Swedish Central Bank could lower the repo rate below two percent. But Trump's threats of tariffs could drive up inflation – and lead to only a reduction.
It is important to be aware of this risk picture that spreads in different directions, says Boije.
Just under 3 percent
The variable mortgage rate – measured as the average rate for the entire mortgage market – is expected to be down at 3.1 percent in February, and bottom out at just under 3 percent in the beginning of the summer – following the expected reduction of the repo rate in May.
During the first half of the year, the differences between the variable mortgage rate and those with binding periods between one and five years are expected to be small. Thereafter, the differences are expected to increase, particularly for the slightly longer binding rates.
In the short term, the differences are very small. They are uniquely small. There is no clear advantage to choosing a particular binding period, says Boije.
No cost to bind
According to the forecast, there is no clear advantage, calculated in kronor, to binding one's rate for a longer period than three months. But the cost of insuring against interest rate risk is small – for all binding periods between one and five years.
For those who tend to want to bind their rate, even if they do not gain anything in kronor, one can say that it costs virtually nothing to do so, according to Boije.
