IN MAPS: How Sweden’s June interest rate hike will hit mortgage payments

2023-06-29 13:30:47

While owners of ordinary family houses, or small housein Västernorrland will on average see their mortgage payments increase by less than 200 kronor a month as a result of the 0.25 percentage point raise, for the heavily mortgaged residents of Stockholm, the increased monthly cost will on average be more than four times that, according to calculations by Stefan Westerbergeconomic spokesperson for Länsförsäkringar, which represents Sweden’s 23 customer-owned county insurance companies.

On average house-owners in Stockholm have seen their annual payments increase by more than 100,000 kronor a year since March 2022, sharply reducing disposable incomes.

“You can see that housing prices and also debt is higher in Stockholm, but people in Stockholm also have higher disposable incomes, so they had a bit more headspace at the beginning, but that has shrunk rapidly compared to how it has to people in other regions over the last year,” Westerberg said.

“We can see that the average household in Stockholm is now spending more on their housing. There’s a lot of money going to interest rates right now.”

While this may not look too bad, it comes on top of the largest combined hike in rates for 15 years, meaning that the total annual payments owners of houses are making on their mortgages have increased substantially since rates started going up in March 2022, by as much as 110,820 kronor a year for the average house owner in Stockholm county.

People who have taken out a mortgage to buy an apartment in a housing cooperative or condominium will on average face a slightly less dramatic rise in their mortgage payments after the June hike, with people in Västernorrland on average having to pay only about 100 kronor extra a month and those in Stockholm having to pay an extra 440 kronor.

But housing cooperatives have their own loans, and any increase in their interest costs is generally passed on to owners of condominium apartments in increased monthly maintenance fees.

The annual cost increase for owners of condominium apartments is also less dramatic than for owners of houses, with those in Stockholm, the most expensive county in Sweden, paying about 60,000 kronor extra a year in mortgage payments more than they did in March 2022.