The probability that the Riksbank’s first interest rate cut will come already in March next year is now up to 80 percent, according to a market letter from the major bank SEB.
If the pricing among interest rate dealers is correct, the key interest rate, which is currently 4.00 percent, has been lowered to around 2.50 percent in a year’s time.
But that is not enough, according to interest rate traders. A year after that, in December 2025, the policy rate will have halved from today’s levels to around 2.00 percent, according to pricing.
Softened its interest rates
The Riksbank’s next interest rate announcement will come on 1 February 2024. According to the bank’s own forecast – which was prepared at the end of November – there is a certain probability, of around 40 percent, that the key interest rate will be raised again.
Since the November meeting, however, several important inflation reports have come in lower than expected, while major central banks around the world have softened their interest rates.
If mortgage rates were to follow downwards by 2 percentage points until the end of 2025, this would mean that the cost of a three-month mortgage would decrease by SEK 60,000 per year or SEK 5,000 per month if the effects of the interest deduction are disregarded.