Read news from:
Austria
SHARE
COPY LINK
For members

PROPERTY

When will mortgage rates in Sweden reach their peak?

Mortgage rates are on the rise in Sweden, as the Riksbank seeks to tame inflation, and its rate increases are passed on to borrowers. But how far will they go and how long before they start to retreat again?

Published: 19 August 2022 16:17 CEST
When will mortgage rates in Sweden reach their peak?
Apartments on Kungsholmen in Central Stockholm. Photo: Fredrik Persson/TT

What has the Riksbank done with rates so far? 

Sweden’s central bank at the start of June announced its biggest hike in rates for 22 years, a double increase of 50 points to 0.75 percent, which will stay in place until September 20th, when the rate is expected to rise again, hitting 1.36 percent by the end of the year, and then be hiked further, hitting 2 percent in the last six months of 2025. 

What has the rise in central bank rates done to mortgages in Sweden? 

The state-owned mortgage company on July 25th increased its various mortgage rates by between 0. and 0.45 percentage points, with the rate on a three month variable rate mortgage rising 45 points to 2.97 percent, and a two-year fixed-rate mortgage by 25 points to 4.11 percent. The 45 points increase to the variable rate mortgage means it will cost the average borrower 1,126 kronor more a month. 

At the end of July, Länsförsäkringar increased its rates on a three month variable loan by 0.50 percentage points to 3.54 percent, with its one year fixed-rate mortgage up 0.4 percentage points at 3.99 percent, and its five and ten year fixed rate mortgages unchanged at 4.24 percent and 4.7 percent respectively. 

When will interest rates peak? 

According to the state-run mortgage bank SBAB, the Riksbank will reduce its core interest rate after the summer back to two percent to reduce the negative impact of rate rises. 

SBAB’s variable rate mortgages are then expected to peak at 3.8 percent next summer, after which they will start to gradually decline. 

Should I get a variable or a fixed rate mortgage? 

According to SBAB, the time when a fixed rate mortgage could come with a lower rate than a variable rate mortgage is “definitely in the past”. 

“For fixed times of more than two years, it’s now expensive to protect yourself against significant rises in variable rates,” said the lender’s chief economist Robert Boije in a press release. “That window looks like it’s closed.” 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PROPERTY

INTERVIEW: ‘Most foreigners in Sweden don’t know they can get back excess rent’

In Sweden, people subletting apartments are not allowed to charge more in rent than they themselves pay. But foreign subtenants don't always know this. We asked Roland Sjölin, lawyer at the Swedish Tenants' Association, about how to get back excess rent.

Published: 18 April 2024 15:19 CEST
INTERVIEW: 'Most foreigners in Sweden don't know they can get back excess rent'

More and more of the people asking the Swedish Tenants’ Association, Hyresgästföreningen in Swedish, for help with excess rent are foreigners, Sjölin told The Local in an interview.

“The problem is that if you’re coming from another country, and you’re subletting an apartment, you’re probably not familiar with the rules in Sweden, because in other countries, it might be okay to overcharge your tenants.” 

He said that clients from India in particular seeking help from the association were now “very common”. 

“Many people come here to work as engineers in the IT sector and then have to rent somewhere,” he said, adding that as a group Indians appeared to be “very aware of their rights.”

Sweden’s rental sector is heavily regulated, with first hand contracts negotiated between landlords and the Tenants’ Association, and the rent that can be charged for second-hand contracts limited to only a small fraction above what the first-hand renter pays. 

“You’re not allowed to make any profit subletting an apartment in Sweden,” Sjölin explains. “You can only charge the subletting tenant the same rent as you [the first-hand tenant] are paying to your landlord, and then you can add the costs for internet and electricity, and perhaps a parking lot, if that is included.” 

Tenants’ Association lawyer Roland Sjölin. Photo: supplied.

You can also add a påslag or “markup”, if you are renting out the apartment fully furnished, but this cannot exceed more than 15 percent of the rent. 

That doesn’t mean that most landlords follow the law. The competition for rental apartments, especially in Stockholm, is so intense, that unscrupulous sublet landlords often try to get away with charging well over the legal amount, charging what is known in Sweden as ockerhyra, or “excess rent” and hoping that their tenants are too desperate to complain.  

What many foreigners do not realise is that even after the rental period is over, they can still get back any excess rent they have paid by applying to the Rental Board or Hyresnämnden, which functions like a court judging rental disputes. 

“If you have the evidence then it’s fairly easy,” Sjölin said. “I get a new case every second week on repayment of unfair rent, and I think that I win most of them.” 

“Nowadays, you can get paid back excess rent up to 24 months back in time, so people tend to get more money,” he added. “In some cases, they can get 200,000 kronor. In other cases, perhaps it’s only 30,000 kronor or 60,000 kronor. It depends on how long you have rented the apartment, and how excessive the rent you’ve been paying has been.”

The first step is to establish what would have been a fair rent, either by asking your landlord what they themselves pay directly or by checking with the Tenants’ Association.

“Because we negotiate most rents in Sweden, we normally know what the firsthand rent is,” Sjölin explained.

Then you need to collect together your evidence.

“It’s a good thing to have a written contract and also papers from your bank showing that you paid rent every month, and perhaps photographs of the apartment, so the rental board can get an idea of the apartment you were renting and what would be a fair rent, and also the termination for the contract so you can show the court how long you’ve been living in the apartment.” 

But Sjölin underlined that since Sweden has free burden of evidence, none of this is essential. 

“Even if you’ve been paying in cash, if you have witnesses who can testify what you were paying each month, you still have a chance of getting your money back. It’s a bit more tricky, but I’ve won two cases like that this year.” 

People in Sweden, he explained, tend to wait until the rental period is over before seeking to get paid back excess rent rather than challenging their landlord while they are still living in the apartment. 

“You don’t have any legal protection for your home for the first two years, so if you bring the matter up with the person you’re renting the apartment from you risk losing your contract and having to move out, so most people wait until they’re supposed to move anyway,” he said.

If you apply to the rental board for a refund close to the day you move out, you can then make your landlord pay back all excess rent paid in the 24 months leading up to the date you contacted the rental board.

If you are a member of the Tenants’ Association, you can contact them and ask for help with your application, but there are also specialist companies, like Orimlig Hyra AB who will buy your case off you and give you a refund within 48 hours, saving you a long wait in exchange for a cut of the money reclaimed. 

Sjölin said that the rental board normally took about 8 months to come to a judgement, but that if the person with the first hand contract appeals, that could extend the waiting time by between six months and a year.

SHOW COMMENTS