Facts: The banks’ average interest rates in July
The banks’ variable interest rate averaged 2.08 percent in July.
Since the Riksbank began raising the key interest rate above zero at the beginning of May, the banks’ variable average interest rate has risen by 0.74 percent on average.
The lowest average interest rate among the banks was offered by Länsförsäkringar, 1.88 percent. Nordea offered the highest, 2.51 percent.
The banks’ average interest rate that could be fixed for three years was 3.6 percent in July. The lowest average interest rate was at Hypoteket, 3.33 percent. The highest was at SBAB and was 3.75 percent.
On average, those who wanted to commit for five years could get an interest rate of 3.75 percent from the banks in July. Handelsbanken offered the lowest average interest rate of 3.6 percent. The highest average interest rate was with Ikano Bank, 3.89 percent.
Source: Compriser
According to comparison site Compricer’s compilation, banks continued to raise both variable and fixed interest rates in July.
But how are the different types of interest rates actually affected by inflation, and what should you do to try to reduce your borrowing costs?
TT asked the savings economists to clarify the matter.
Variable interest rate
The short-term or variable interest rates are set according to what is happening here and now, where the Riksbank’s policy rate plays a major role.
— When the Riksbank raises the key interest rate, the variable interest rates also rise. It may differ by a few tenths of a point, but they should keep pace, says Sharon Lavie, savings economist at Lendo.
In order to counteract rising inflation, the Riksbank decided last spring to leave the interest rate at zero and has since raised the key interest rate by a total of 0.75 percentage points.
During the same period, the banks’ average variable interest rate has increased by 0.74 percentage points.
— Some have raised a little more, some a little less, some come a little earlier and some come a little later. But we can see that the variable interest that new customers receive clearly follows the increase in the policy rate, says Compricer savings economist Christina Sahlberg.
Fixed interest rate
The long-term fixed interest rates are not directly affected by the Riksbank’s policy rate. The interest rate market’s inflation expectations govern there, but also the price of the housing bonds that the banks sell in order to be able to lend money in turn.
Fixed interest rates also rose in July, which stands out because the market now predicts that inflation will fall in the long run as Sweden enters a recession, says Lavie.
— Then interest rates should either stop or even drop a little.
That this has not happened indicates that the banks are raising their profit margins on the loans, Lavie continues.
— I think it’s about competition and free pricing. That we are currently in a situation when consumers do not raise their eyebrows at increased interest rates and perhaps the banks will take advantage of that opportunity and charge higher margins.
Fixed interest rates have also risen in line with housing bonds, says Sahlberg. Now, however, the interest rate on housing bonds has decreased since June, which should affect mortgage rates.
— It’s a little more sluggish there. On the other hand, it may signal that we may have reached some type of ceiling on the fixed interest rate, if housing bonds continue to fall now.
Negotiate or change banks
An important message for all borrowers, says Sahlberg, is that the banks make more money on our loans now than before and that you always have the opportunity to negotiate or change banks.
A first step is to call and talk to your bank and negotiate.
— I think there are a lot of people who just need to call the bank and say “hey, I have a very bad discount, can I get a better discount?” and then they will get it immediately, says Sahlberg.
Also compare the offers of several banks. Before that, you should think about what financial situation you are in, says Lavie, and what you are willing to pay for security.
A variable interest rate can be cheaper in the long term, but a fixed interest rate is safe as you know what the bill will land on during the fixed period.