Ever since the IT crash at the turn of the millennium, the saving of the Swedes has moved in an upward curve. This shows statistics from Statistics Sweden about Sweden’s saving and borrowing. Savings consist mainly of investments in funds and shares, but ordinary savings in bank accounts are also popular. The third quarter of 2018 was the quarter that the Swedes saved most since 2000.

When it comes to Swedes’ lending habits, the statistics show different pictures depending on the type of loan. The number of student loans and unsecured loans has not seen any significant increase or decrease over the past 10 years. By contrast, loans from banks and housing institutions have increased significantly. Of these loans, mortgages go out of the game despite two rounds of rules regarding repayment requirements. Worth noting is that housing prices have also risen, which may explain the Swedes’ increased borrowing needs.


Increased repo rate

Increased repo rate

The question is whether the trend of increased savings and more mortgage loans will continue in the coming years. A major influencing factor is the repo rate, which the Riksbank raised in January from -0.50% to -0.25%. The interest rate has been negative since 2015, but the forecast is that it will continue to increase in small stages in the coming years. This may in turn raise interest rates on mortgages and partly reduce the number of new mortgages, but also cause the Swedes to receive less money for savings.


Fixed or variable mortgage rates?

mortgage loan

Since mortgages involve large amounts of money, a small increase in interest rates can lead to large differences in monthly costs, which can be difficult to manage financially. One way to find the most advantageous loan is to compare different mortgages. By having a lower interest rate on the loan, you have a more stable basis if the interest rate goes up.

However, you can choose to have a fixed mortgage rate. The advantage of this is that during the binding period you can be absolutely sure what your monthly cost will be, regardless of any repo rate increases. If you have a variable interest rate, the cost may be higher, but the advantage is that the cost can also be lower in case of any interest rate cuts.

It is constantly speculated as to whether the repo rate will go up or down. None of us can for sure predict what will happen in the future and it simply has to be as informed as possible about the various alternatives. What we can note, however, is that Swedes continue to save to a large extent, while at the same time taking more and more mortgage loans.