When will the interest rate cut be felt in the wallet?
How soon an interest rate reduction is felt in the wallet is determined by when your interest rate is reset next time. Even if you have what is usually called floating rate then it is bound in three-month periods. When the fixed interest period expires, you will receive the current interest rate for that day.
How does the policy rate affect my mortgage interest rate?
The Riksbank’s policy rate has a connection to the interest you as a customer receive, but not always as big a connection as one might think. Somewhat simplified, you can say that in order to lend money to customers, the banks in turn need to borrow money, which they do in a market. Interest rates on that market are affected by how the Riksbank sets the policy rate, but also by inflation expectations and how other central banks act.
Today’s interest rate announcement will lead to variable mortgage rates being lowered, but not necessarily by exactly 0.25 percentage points and it won’t happen immediately either. For example, SBAB has already lowered the variable mortgage interest rate on three occasions starting in December last year, partly as a result of expectations that the Riksbank and other central banks will lower interest rates during the year.
How much will my interest costs be reduced?
For the sake of simplicity, let’s assume that the actual rate cut as a result of today’s announcement will be 0.25 percentage points. If you have a loan of 1 million, this corresponds to reduced interest costs of SEK 208 a month or SEK 2,500 a year, before interest deductions. If you instead have a loan of 3 million, the reduction corresponds to SEK 625 a month or SEK 7,500 a year.
How do I use the money that I receive in the best way?
According to SBAB’s latest forecast, the policy rate will be lowered by a total of 1.25 percentage points this year. If it becomes a reality and mortgage rates are assumed to drop to the same extent, it could be quite a lot of money. For a loan of 1 million, this corresponds to reduced interest costs of just over 1,000 kroner a month before interest deductions. For a loan of SEK 3 million, this corresponds to just over SEK 3,000 a month or SEK 37,500 in a year.
From a survey we recently conducted among 1,000 home owners, it appears that 86 percent plan to save the money left over if the interest rate is lowered. Only 6 percent state that they would increase their consumption. Perhaps the desire to save is a receipt that we learned something from the financially very tough years, which we now hopefully have behind us. The importance of financial margins and buffer savings has become clearer for many home owners. Here you can read more about different options for your savings.
