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PROPERTY

MORTGAGE Q&A: Your questions on Swedish interest rates answered

In the second part of our property Q&A, we answer reader questions on when interest rates will start going down, as well as how and when to negotiate rates with your bank.

MORTGAGE Q&A: Your questions on Swedish interest rates answered
Photo: Fredrik Sandberg/TT

In a post on Facebook, we asked The Local’s readers to submit their questions on property. Here’s the first part of that article, where we discuss questions like whether it’s better to buy or rent, whether to buy a house or apartment, and if house prices have stabilised.

In this article, we answer questions to do with interest rates and mortgages.

When will interest rates start going down?

Sweden’s interest rates currently stand at 2.5 percent, with the next key interest rate meeting (where the Riksbank will decide whether to alter interest rates or not) scheduled for February 9th. 

These meetings take place roughly two months, with further meetings scheduled for April 26th, June 29th, September 20th and November 22nd this year.

Most analysts expect the bank to increase the policy rate by 0.50 points at this meeting. Handelsbanken’s chief economist Christina Nyman told the TT newswire that she expects another rate increase in April to 3.25 percent, after which rates will stay at that level for some time.

Nordea’s economists have the same prognosis, while experts at Swedbank expect a further increase in June to a peak of 3.5 percent.

Danske Bank predicts that the Riksbank will raise rates by 0.5 percentage points in February to 3 percent total, with a possible second hike of 0.25 percent predicted for April, depending on inflation in the first quarter of 2023.

In terms of drops in the interest rate, it predicts that rates will remain high throughout 2023, with the Riksbank waiting until 2024 to lower the rate by a total of 1 percentage point.

What is the new normal for interest rates going to be?

As above, we can expect rates to rise and remain high throughout this year, dropping to around 2.25 percent in 2024, if Danske Bank’s predictions are correct.

This is slightly lower than the current level of 2.5 percent, so it looks like we can expect things to get worse for at least a year, after which rates will be slightly lower than they are currently.

Essentially, don’t expect rates to drop to the same low or even negative levels they have been in recent years any time soon.

How do you negotiate interest rates with the bank?

The first time you negotiate your interest rates will be when you buy your property. You might be keen to get a deal sorted as quickly as possible so you know your purchase has been finalised, but negotiating a good rate is important as it can literally save you thousands – or even tens of thousands – of kronor over the course of a year.

Firstly, do your research. This includes using price comparison tools such as Compricer or Konsumenternas, but also looking at individual websites of mortgage providers and comparing interest rates there.

Make sure you look at both listräntor (the advertised interest rates) and snitträntor (the average rates people were actually given in recent months) to get an idea of what you should be paying, and remember, the listränta is a starting point for negotiations rather than a fixed offer.

Check if your bank offers any discounts for moving your pension over or opening an account with them, or rewards for energy-efficient properties, for example.

Many banks have a calculator on their website allowing you to use a sliding scale to alter the size of your deposit and see how that affects your interest rate, so make sure to have a look to see if you can get any discounts there, too. Some banks will offer you a discount if your belåningsgrad (the size of your loan compared to your deposit) is lower, so consider buying a slightly cheaper property or putting in more cash, if you can.

Here’s our article on how to get the best rate on your mortgage for more advice.

When should I renegotiate?

In general, you should consider renegotiating your interest rate when your fixed-term rate expires (variable rates are technically fixed for three months, so this applies to all types of mortgage). You may be able to get a better deal if you qualify for any new discounts or if your circumstances have changed for any other reason, such as if you’ve paid off enough of your loan that your belåningsgrad is significantly lower than when you applied.

If you renegotiate your interest rate before your fixed-term rate has expired, you will be charged ränteskillnadsersättning (literally: “interest difference compensation”) to compensate the bank for the loss of income between the point at which you renegotiate your loan and the point your current rate was due to expire, so you may not be any better off financially than if you’d just kept paying the same rate of interest.

If you have a variable rate, however, you won’t be charged ränteskillnadsersättning for renegotiating your loan before the date your current interest rate is due to expire.

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For members

FARMING

How to grow your own fruits and vegetables in Sweden

Whether you were a keen gardener or not before you moved to Sweden, growing in the Nordic climate might not be quite what you're used to. The Local spoke to master gardener John Taylor for his tips on growing veg in Sweden.

How to grow your own fruits and vegetables in Sweden

Know your growing zone

Sweden is split into eight different growing zones, known as växtzoner in Swedish, with one being the mildest zone in the far south of the country and eight being the harshest, in the far north.

The easiest way to figure out which zone you live in is to search your address on a digital growing zone chart like this one from the Swedish Garden Association.

There are two “bonus” zones too, which you’re unlikely to see on plant labels: zone zero, which refers to extra mild conditions in zone one, like a sheltered south-facing garden or the climate inside an unheated greenhouse, and the fjällzon or zone nine, which is found in mountain regions.

Lots of fruit trees can handle snow, for example, but not all of them will survive the winters in harsher, colder zones.

“Apple trees or fruit trees will survive snow,” British gardener and cider maker John Taylor, known for presenting Swedish gardening show Trädgårdstider (Garden Times), told The Local.

“You can grow all kinds of apples, pears, plums, cherries, we can grow edible quince in southern Sweden, so there’s a bunch of fruit trees which will survive, but it depends what rootstock they’re on – that’s called grundstam in Swedish,” he explained.

“There’s one rootstock called B9 that survives down to minus 40, because it’s from Russia, then there’s another called M106, and that probably doesn’t want to live in the depths of Norrland.”

Buy plants local to you

An easy way to make sure the plant you’re planning on buying is going to survive in your zone is by sourcing it from a local plant nursery or garden centre, as they won’t sell plants that can’t handle the local climate.

“There’s a nursery in the north of Sweden and Finland called Blomkvists, they sell lots of fruit varieties which will survive up there,” Taylor said. “You can grow pretty much anything you want up there, just as we can [in Skåne, southern Sweden], but it will be different varieties that taste different and will survive the frost.”

You won’t be able to grow Mediterranean fruits like lemons or oranges in Sweden unless you bring them inside during the winter, although you should be able to grow peaches or nectarines in most of the country.

“The further up in the country you go, the further north you are or the further away from the coast, the harsher the climate becomes, so you might need to have them on a south-facing wall or in a greenhouse,” Taylor said.

Think outside the box

Although the growing season in Sweden may be shorter than it is further south, there are still a number of crops from warmer climates that do surprisingly well.

“People don’t really grow cucumbers outside here, I don’t think they realise that you can actually grow them outside,” Taylor said. “Tomatoes, too. You don’t need a greenhouse, you just stick them in the ground, they’re basically a weed – you’ll get so many you won’t know what to do with them.”

Sweetcorn, for example, performs well in a Swedish climate, Taylor said, although Swedes more often grow it as a feed crop for pigs.

You can also test things by trying to build a microclimate so you can grow things that are one or even two growing zones away from yours. Usually this is done by providing shelter from the wind and the weather using fences, hedges or by planting near buildings, as well as providing protection during the winter.

And if you’re pushed for space, look into companion planting, where you can grow multiple plants which complement each other in the same space.

One example of this is the “three sisters”: corn, climbing beans (or peas), and squash. The corn provides a support for the beans or peas, which anchor the corn in high winds while fixing nitrogen in the soil, while the squash’s large leaves provide shade for the soil, preventing it from drying out.

Don’t be put off just because you don’t have any outside space

Thinking outside the box applies to balconies too.

“If you’re in a built-up area, you will get reflected light from other buildings, so even if you’re on an east-facing balcony, you should be able to grow a lot of stuff. North is a bit more tricky, but east and west are probably better than south as you’re not getting hammered by the sun all day,” Taylor said.

You should be able to grow things like tomatoes, cucumbers and flowers, but it’s important to get hold of good soil and replenish it each year, so your plants have enough nutrients.

“Anybody with a balcony can grow pretty much the same that you can in a garden, you just have to get the soil up there and you always have to fertilise, the soil becomes nutrient deficient after one season.”

“But if you’re prepared to get the soil up on your balcony you can grow anything, even fruit trees. They will be smaller and stunted, and won’t give as much fruit – I’ve done it myself – so don’t see it as an obstacle, see it as a possibility.”

Kale and tomatoes growing on a balcony. Photo: Johan Nilsson/TT

Take inspiration from Swedish growers

Thinking outside the box doesn’t mean that you should completely ignore what all your Swedish neighbours are doing. If you’re not sure what to plant in your garden or what fruit and veg you should try to grow, take a look at what other people who live near you are growing.

You might also come across some crops you’ve never tried before which work well in a Swedish climate, like Alpine strawberries (smultron), honeyberries (blåbärstry), wild garlic (ramslök) or sea buckthorn (havtorn).

This doesn’t just apply to varieties, but also where you plant them in your garden. Some crops need full sun, some work best in shade, and others, like asparagus, can grow tall and cast a shadow over your garden.

“You want a south-facing location for all fruit, and berries – check out what your neighbours are doing,” Taylor said.

If you don’t want tall plants to cast a shadow over other crops, see if you can plant them at the northernmost edge of your garden, while making sure that sun and soil conditions are still optimal. Blueberries, for example, need acidic soil to thrive, meaning you will probably need to amend your soil if planting in the ground, or even plant them in containers.

Think about what you want to do with your harvest

This may seem obvious, but it’s important to plant what you like to eat, too. If you hate the aniseedy, licorice-y taste of fennel, why bother growing it?

You should also choose the variety of crop based on what you’re going to use it for. Do you want to make pickles with your cucumbers, or are you going to eat them on salads? Do you want cherry tomatoes for snacking on, or big beef tomatoes for making sauces?

“Think ‘what am I going to do with my harvest’,” Taylor said. “Am I going to juice it? Am I going to preserve it? Am I going to make cider with it, for example?”

Apples, for example, can range from sweet eating apples to tart cooking apples, so make sure you do your research before you commit to buying an apple tree. Most varieties exist in English-speaking countries, so you should be able to search the name of the variety online and find some information in a language you understand, if you don’t speak Swedish.

“Patience is a virtue,” he added. “A lot of fruit trees are going to take two or three years, or even more, to give a harvest. So you have to have patience.”

Learn to deal with the Swedish weather

Many areas of Sweden along the coast or in the south of the country can get windy, which you’ll have to learn to deal with.

“How to deal with the wind? You can’t,” Taylor said. “We cannot affect this, we are powerless.”

“What you have to do is plant them in areas where there’s less wind, usually behind large buildings.”

Some plants simply won’t survive the wind, so either you plant them close to buildings, protect them, or accept that you’re restricted in what you can grow.

Make sure to provide supports for crops which will grow tall, like sunflowers, peas, beans and sweetcorn, and tie these down well or bury them deep in the ground, so summer storms can’t blow them away.

Listen to the full interview with John Taylor in The Local’s Sweden in Focus Extra podcast for Membership+ subscribers. Out on Wednesday, May 8th. 

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