Fixed income market participants - that is, traders at banks and institutions - are expecting at least one increase of 0.25 percentage points in the key rate in August or September. The probability of a second increase during the year is priced into the market at 40 percent.
Probably no interest rate change in May
Normally, variable mortgage rates follow changes in the key interest rate. Interest rate increases of 0.50 percentage points would raise the annual interest cost on a mortgage of three million kronor by 15,000 kronor, ignoring the effects of the interest deduction.
The next interest rate announcement from the Swedish Central Bank will come on May 7. The market and economists at SBAB and SEB agree that there will probably be no change in the key interest rate - which has been at 1.75 percent since the fall of 2025.
However, both SBAB and SEB economists - as well as the Swedish Central Bank - point out that the war in the Middle East could change this. The risk is that the global price shock to oil, gas, aluminum and fertilizer, among other things, which is already underway, will spread to other parts of the economy.
"If it were not for the war in the Middle East, the Swedish Central Bank would be close to lowering the interest rate, given continued major downside surprises in inflation and rising question marks about the strength of the general economic recovery," SEB's economists write in a comment.
Market interest rates affect
SBAB's chief economist Robert Boije writes in a report that "The interest rate trend could be completely different from the one we now see ahead of us."
"However, we choose to be optimistic about a de-escalation of the conflict and remain with our assessment of an unchanged policy rate during the year," he adds.
In addition to the policy rate, mortgage rates - especially fixed mortgage rates - are affected by how market interest rates move around the world, since mortgage banks finance their lending with their own bond loans.
On May 6, a preliminary inflation figure for April will be released from Statistics Sweden (SCB), whose figures so far this year have surprised on the downside. The latest SCB survey showed underlying CPIF inflation, adjusted for energy prices, of 1.1 percent in March.
The Swedish Central Bank's inflation target is 2.0 percent.
The Swedish Central Bank's Executive Board - which has had a policy rate of 1.75 percent since last autumn - will meet on May 6 to make a decision on the policy rate. The interest rate announcement will be made on May 7.
To bring inflation up to target, the Swedish Central Bank may need to stimulate demand for credit by lowering the policy rate. However, if inflation becomes too high, the policy rate may need to be raised to tighten credit.
