Interest rates are clearly pointing downwards. Inflation is gone, at least for now, and the Swedish Central Bank is sketching out several rate cuts in the near future.
This speaks in favor of variable mortgage rates following suit. It's also something the Swedish people have taken to heart. Almost all new mortgages are taken out with variable rates at present, according to statistics.
But despite the temptation to stay variable and follow the downward trend, calculations by SBAB show that it's more or less a tie to take out a 3-5 year fixed-rate mortgage at present compared to staying variable for the entire period, according to Robert Boije, based on the forecasts coming true.
There are downsides
The state-owned mortgage bank, like many others, expects the Swedish Central Bank to lower the interest rate to 2.0 percent by the end of next year. Then, the variable mortgage rate would be around 3 percent in January 2026 as an average rate among banks. For comparison, the average rate for a three-year loan at, for example, SEB and Handelsbanken is currently around 3.2-3.3 percent.
So, looking only at the cost, given this forecast, it's not obviously wrong to choose a fixed rate for three, four, and five years, says Boije.
But the downside of a fixed rate is that you're stuck with a bank, you can't switch or choose another loan without having to pay a costly interest rate differential, reasons Robert Boije.
"Not entirely crazy"
And forecasts can quickly become outdated, interest rates can fall further, or inflation can take off again.
We've learned in recent years that it can happen, that all these forecasts go in a different direction. If you have small margins in your economy, it's absolutely not entirely crazy to fix the rate now for a slightly longer period, says Robert Boije.
The average rate is the rate that the average customer actually pays for their mortgage over a specific period and binding period, unlike the list rate, which is the banks' advertised rates that are often one percentage point higher.
Each bank must disclose the average rate on its website, according to rules introduced by the Financial Supervisory Authority in 2015 to strengthen customers' position vis-à-vis banks.
The latest available data refers to August:
Then, Danske Bank had the lowest average rate for a three-month loan, 4.25 percent. Next came SEB and the state-owned smaller player, SBAB, with 4.29 and 4.30 percent, respectively. Highest were Nordea and Swedbank, 4.45 and 4.41 percent, respectively.
For a two-year fixed-rate mortgage, Handelsbanken had the lowest average rate in August, 3.14 percent. SEB came in second, while Danske Bank was the most expensive, with 3.60 percent.
Source: The banks' websites, based on the banks Swedbank, Handelsbanken, SEB, Nordea, Danske Bank, and SBAB.
