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MONEY

Your January budget: Five ways to save money in Sweden this month

It's the start of the year and the end of the indulgence of the holiday season. Here's how to try to claw back some space in your wallet in Sweden.

Published: 9 January 2023 15:34 CET
Your January budget: Five ways to save money in Sweden this month
Knowing what vegetables are in season in Sweden could help you cut your food bill. Photo: Stina Stjernkvist/SvD/TT

Take inventory of your bills

The start of the year is a good time to go through your regular bills and see if there’s a way you can save money there. Don’t forget to check your direct debit (autogiro) payments to see if you’re paying money for subscriptions you no longer use. Here are some more tips for reducing your regular bills.

Buy seasonal food

Seasonal produce is usually cheaper – and better for the environment.

Things to look for in Swedish grocery stores in January include: Green kale, Brussels sprouts (added bonus: they’re usually priced down after Christmas), turnips, carrots, swedes, red beets, red cabbage, white cabbage, artichokes, onions and apples. These are grown in Sweden and can be bought fresh this time of the year.

Aubergine, oranges and lemons, kiwi, spinach, broccoli, cauliflower and fennel are in season in other parts of Europe.

Get a cheaper deal on your electricity

Electricity prices soared to record levels in Sweden last year, and they’re expected to remain high in 2023 too.

Compare the prices of various electricity companies at price comparison sites, such as Elskling, and don’t be scared of calling your company to negotiate.

Swedish houses are generally well insulated, so in the shorter term, save money by turning your heating down just slightly, making sure your dishwasher and washing machine are full before turning them on, and having shorter showers. Here’s The Local’s guide to how to dress to keep warm in the Swedish winter.

The cost of electricity depends on your living situation. Electricity tends to be the most expensive in southern Sweden, and your bills are likely higher if you own a house rather than an apartment. If you’re staying in a sublet or an apartment housing association, it is possible that the cost is included in your monthly rent, or avgift, if you own your property.

Save money on your gym membership

Who hasn’t joined a gym the weeks after New Year’s Eve? The downside is they’re expensive, so the best way to save money is not to join a gym at all. Instead, look out for outdoor gyms (utegym – they look like a wooden playground) scattered across Swedish cities and free running and exercise groups in your area.

In January, you ask. Yes, in January. Even in the snow? Yes, then too.

Pavements are often kept clear of snow in Sweden and you will see people exercising come rain, snow or shine. Just remember to dress right (not too warm, but gloves and a hat are sensible) and invest in a good pair of ice studs for your running shoes – it’s a one-time cost that will pay off in the long run.

If you do want to go to the gym, it’s worth asking your job if they can pay for your membership as a friskvårdsbidrag (health contribution), a tax-exempt benefit that many employers offer in Sweden and means you can get money to put towards a sports activity of your choice (no more than 5,000 kronor per year).

Make the most of the end-of-year sales

The post-Christmas sale (mellandagsrean) might still be ongoing in some shops with prices dropping lower and lower. Have a think about what you need to buy for the year ahead in terms of things such as clothes, electronics or furniture, and then go online to see if you can find what you need at a reduced price. The key is to plan your purchase before you go shopping and not let yourself be tempted by things that seem great at the moment, but won’t be needed or wanted six months from now.

Off-season items are often the cheapest, so buy your summer clothes now, or even your winter boots for next year. Or better yet, don’t buy anything at all. Maybe it’s cheaper and more sustainable to fix things you’ve already got. There’s also a booming second-hand market in Sweden where you can grab a bargain.

Did you buy or receive Christmas presents that weren’t quite right? Know your right to return items. This guide by The Local explains the rules in Sweden.

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PROPERTY

Swedish mortgage holders ‘under most financial strain in 12 years’

People with mortgages are seeing more strain on their finances than at any time in the last 12 years, Sweden's financial stability watchdog has said in a new report, although it says that the majority of people taking out new mortgages still have some wiggle room in their personal finances.

Published: 29 March 2023 14:17 CEST
Swedish mortgage holders 'under most financial strain in 12 years'

The new report from Sweden’s Financial Supervisory Authority (FI) found that the proportion of income mortgage holders were paying out in interest payment had almost tripled between 2021 and 2022, reaching 12 percent of disposable income. 

“In twelve years, we haven’t seen households under so much pressure as we do now,” FI’s General Director Daniel Barr said at a press conference announcing the report. “Pressure has increased on households and will continue to do so throughout the year.”

In the report, the authority notes that Swedish households’ loans had been increasing faster than their disposable income for some time, due in part to historically low interest rates and rising house prices.

However, during 2022 and the beginning of 2023, inflation rose substantially, interest rates more than doubled and house prices dropped.

In addition to this, many banks and other financial actors were now predicting a sustained period of low growth or even a recession, which would have a knock-on effect for households, not least those who bought properties in this time period.

The authority now believes that interest payments could increase to nearly 16 percent of disposable income by the end of 2023.

 

Number of first-time buyers increased in 2022

The analysis, based on a sample of people taking out new mortgages in early autumn 2022, showed that activity on the property market declined overall in 2022, but the number of first-time buyers increased to close to the levels seen before the pandemic in 2019.

Most of the people in the sample finalised their property purchases in the summer of 2022, or earlier. 

 

Otherwise, the report states, the sample was similar to results seen in 2021. People taking out new mortgages bought, in general, properties of a similar price in 2022 as in 2021, with mortgages of a similar size.

The average size of the loan compared with the overall price of the property - the belåningsgrad or loan-to-value ratio - was also roughly the same in 2021 as in 2022.

The skuldkvot or debt-to-income ratio, the size of the mortgage compared to household income, was slightly lower in 2022, with a somewhat smaller number of borrowers with a debt-to-income ratio over 450 percent and a loan-to-value ratio of over 70 percent. 

 

This may be in part due to the fact that a debt-to-income ratio over 450 percent and a loan-to value ratio over 70 percent both require borrowers to amortise an extra 1 percent of their mortgage each year, with borrowers falling into both categories having to amortise an extra 2 percent.

Average interest rate more than double previous year

The average interest rate on the mortgages taken out in the sample group was 3.1 percent, more than double the average 1.4 percent rate on mortgages in the previous year's sample. This means new mortgage holders are using a much larger proportion of their income (10 percent) to pay interest than in previous years.

This is the highest average interest rate reported since 2012.

 

At the same time, a much larger proportion of new mortgage holders chose variable rate mortgages than in 2021 - the largest number reported since 2016.

Those taking out new mortgages in 2022 were in general worse off already at the point they took out their mortgage compared with the same group in 2021, due chiefly to increased interest rates and prices rising in general.

This means, the report states, that many mortgage holders will need to reduce their savings or adapt their consumption to the changing economic situation.

Those who have taken out mortgages more recently will be affected to a greater extent, it adds, as they often borrow larger amounts and have less room in their personal finances to accommodate even higher inflation, higher interest rates and a loss in property value.

 

Individuals in financial trouble are, in some cases, able to pause the requirement to amortise their mortgages at the discretion of their bank, in what is referred to as a ventil, similar to a pressure valve. 

FI is still investigating to what extent the banks are allowing customers to use this pressure valve, with a final report on this due in June 2023. It states, however, that the general picture is that the pressure valve is being used much more often than in previous years.

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