On September 5 came the new decision on the repo rate. It was then left unchanged at -0.25 percent. The plan since then has been to slowly but surely start raising the interest rate every year until we reach a more normal level. However, it seems that the plan may need to be revised slightly.
The plan to raise the repo rate can be hampered by various factors such as uncertainty in the outside world (Brads’s trade war and other statements), Brexit and the general risk of recession in both Sweden and the US. The Fed (US Federal Reserve Federal Reserve) just lowered its policy rate, which goes against the idea of raising in Sweden.
Most economists who follow developments in both Sweden and the rest of the world have constantly believed that the Good bank must rethink and stop its plans for increases, precisely because it is such an unsafe and bad situation in the world. There is simply a risk of worse times and raising the interest rate just when these problems start to accumulate will be poor timing.
Can the Good bank still raise interest rates this year?
However, the Good bankbank said in its latest decision that they still expect to raise interest rates according to plan at the end of the year. This surprised many as it really feels like it is an uncertain situation and given how cautious the Good bankbank has been in the past, it goes against their own principles.
Unemployment in Sweden has not directly shown any good figures lately and there have been indications that we may be heading into a recession, so there may be worse times ahead. Then you need stimulation, for example in the form of low interest rates. The Good bankbank says in itself that they will adapt monetary policy to the cyclical trend, but the question is whether they seriously believe that it will be possible to raise interest rates at the end of the year, despite everything that is going on.
The economists who speculate on the subject believe that there will still be no increase in December, even if that is what they have been flagged for. There are simply too many things that point in the opposite direction, so a raise would be risky. Especially now that the Fed has also lowered the interest rate and is likely to lower it even further in the future.
What does the interest rate message mean for us with loans?
Basically, this interest rate message does not say very much in itself, but given how the situation looks in Sweden and globally, it certainly seems to be a long time to come with low interest rates. It is unlikely that the Good bankbank will raise interest rates significantly for many years.
Even if they were to implement an increase in December (which most people now consider less likely), it will not in itself affect the interest rates on, for example, mortgages so much that one has to be worried. In the long term, interest rates will still be low and in most cases it is still good to have a variable interest rate on the mortgage.
If you find a really good offer on bonded loans (may come with special offers etc. sometimes, which may even be lower than the average interest rates for floating) then it can of course always be worth considering to bind the loan. Especially then, if you intend to stay in the same residence for the entire duration of the loan.
Disadvantage of tying your mortgage is usually that it is more expensive
The disadvantage of tying your mortgage is usually that it is more expensive than mobile plus that you are less flexible and, for example, can not change bank so easily or change housing without a little hassle. But if the interest rate on a mortgage loan for example five years is lower than what you pay for now, then one argument is already blown away. If you have no problem being unlocked, you may be able to save some money.