Interest rate rises predicted for Sweden

swe-kronor-littleThe state-owned Swedish mortgage lender SBAB has advised that home owners will suffer reduced spending power under sharp autumn interest rate increases predicted to be made by Riksbank.

The latest SBAB report states that the current record low benchmark repo rate of 0.25 percent will soon be raised by the central bank. The Local reports that the SBAB’s chief economist Tomas Pousette further expects that rate increases will continue well into 2011 and that they are likely to be followed by rising mortgage interest rates.

“The bottom for longer-term fixed mortgages has been reached and they will start to rise during the first six months of 2010,” said Pousette. “By the end of 2011 we expect that three-monthly interest rates will have risen to around 3.5 percent,” he added.

The SBAB report forecasts that quarterly-fixed mortgage interest rates would be approximately two percent by December this year, increasing to 3.35 percent by this time next year. Mortgage rates under a two-year payment period are estimated to rise from 3.65 percent to 4.95 percent while five-yearly fixed mortgages are predicted to rise from 4.90 percent to 5.50 percent.

Pousette concluded that the optimistic outlook held by Riksbank for an economic upturn over the next year is primarily due to the anticipated interest rate rises.

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