Published 22 March 2023 at 10.43
Economy. Rising interest costs are putting more and more debt-laden households under pressure. Higher interest rates and inflation mean that borrowing space is decreasing and housing prices continue to fall, according to Handelsbanken's forecast.
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– We see no tendency for Swedish inflation to be on the way down, rather the opposite, and at the moment we believe that weighs more heavily on the Riksbank than the risk of financial instability, says Handelsbanken's chief economist Christina Nyman.
The forecast is therefore that the Riksbank, despite the financial unrest, will raise the interest rate by 0.75 and 0.5 percentage points respectively in April and June, up to 4.25 percent.
The fall in house prices has slowed down but will, according to Handelsbanken's forecast, be renewed power when housing interest rates continue to rise during the spring.
– Housing prices fall by a total of 20 percent compared to the peak in February last year and then increase only slightly as households' ability to pay remains under pressure, says Christina Nyman in a press release.
The mortgage calculation is tightened by higher inflation and increased interest rates and limits the loan space for new mortgage borrowers.
– In order for a family with two adults with a median wage and two children to have the same surplus in the calculation in 2023 as last year, the loan amount needs to shrink by around 14 percent, says Christina Nyman.
The majority of mortgages have variable interest rates and two-thirds of mortgages have their interest rates renegotiated within a year, which means that the impact on households' finances from the Riksbank's increases is rapid.– Given our forecast on the Riksbank's policy rate, the banks' variable average interest rates on mortgages rise over 5 percent during the year, and then fall back somewhat, says Christina Nyman.
Low activity on the housing market has gone hand in hand with falling lending to households, while banks' lending to property companies has rather decreased in the opposite direction when financing on the capital market has become both expensive and difficult to access. However, the banks are judged to be more cautious about increasing lending to the real estate sector in 2023 and the pressure on the companies to reduce their indebtedness continues to be strong.
– For construction companies, lower housing prices, higher interest rates and material costs mean that housing construction slows down a way we haven't seen since the 90s crisis, according to Christina Nyman.