A record number choose variable interest rates on the mortgage

Published 17 July 2024 at 13.05

Economy. In June, fully 98 percent of SBAB's new mortgage customers chose variable interest rates on the mortgage. It is a record high and a further rise from the already very high levels at the beginning of the year.

Share the article

TwittraShare

It is clear that the election is influenced by an expectation that the Riksbank should lower the key interest rate so much that it will be more advantageous to choose a variable interest rate, even though the longer fixed interest rates are initially significantly lower.

In June, only 1 percent chose to tie the entire loan, while an equally large andel chose a mix of variable and fixed interest.

– Historically speaking, on average over time, it has proven to be more advantageous to choose a variable interest rate compared to fixing the interest rate. Seen in that light, it is not surprising that many choose variable interest rates. That as many as 98 per cent now do so is somewhat unique, says Robert Boije, chief economist at SBAB, in a dispatch.

He continues:

– It is clear that the election is affected of an expectation on the part of the new mortgage borrowers that the Riksbank will lower the policy rate so much that it will be more advantageous to choose a variable interest rate, despite the fact that the longer fixed interest rates are significantly lower in the initial situation.

One way to form an idea of ​​what might be a well-balanced fixed interest period is to look at different forecasts of interest rates with different fixed periods. When SBAB made the latest such forecast at the turn of May/June, it was cheapest in terms of the expected interest cost to choose a variable interest rate that is fixed every three months compared to choosing fixed periods of 1–5 years in June. However, the additional cost of fixing the interest rate for primarily four, but also five, years was relatively small.

– Given our latest forecast of interest rates with different fixing periods, at the beginning of June it was cheapest to choose a variable interest rate the expected interest cost in the future compared to fixing the interest already in June for fixed periods of 1–5 years. The additional cost of tying the interest rate for four to five years was at the same time quite small. Even though many now say that the Riksbank will lower the interest rate several more times this year, which in that case will reduce the variable mortgage interest rates, there are several risks in the outside world that could throw gravel into the interest rate lowering machinery. For households that want to spread the risk or that have tight margins in their finances, against this background it may still be worth tying up parts of the loan, says Robert Boije.