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Interest rates for Swedish household loans continues to fall

Tuesday, 27 March 2012
Households' loans from Swedish monetary financial institutions (MFIs) showed decreasing interest rates in February. This explains the tendency where less loan are being demanded according official data and report.

The average interest rate for households' new loan agreements amounted to 4.05 percent in February. This is a decrease of 0.05 percentage points compared to January and 0.20 percentage points lower than in December statistic Sweden shows. MFIs include banks, housing credit institutions and finance companies.

The falling interest rates for households' loans are mainly due to a decrease in the short-term rates, but long-term rates also showed downturns. The floating rate fell from 4.44 percent in January to 4.36 percent in February. The interest rate for new loan agreements with a fixed period of more than three months up to one year was 3.89 percent in February. In January the corresponding rate was 4.09 percent. Households' interest rates for new loan agreements for housing loans amounted to 3.96 percent in February, a decrease compared to January when the interest rate was 4.04 percent.

The lending rate to non-financial corporations fell in February, as in January. In February the average rate for new loan agreements was 3.71 percent, compared to 3.80 percent in January (revised figure). Both short-term and long-term interest rates contributed to the decrease.

Interest rate, new agreements to housholds Growth rate, lending to households Interest rate, new agreements to non-financial corporations Growth rate, lending to non-financial corporations
Feb 2011 3.76% 7.60% 3.20% 1.90%
Jan 2012 4.10% 5.10% 3.80% 6.60%
Feb 2012 4.05% 5.00% 3.71% 6.00%
Source: Statistic Sweden
Households' interest rates for deposits also fell in February compared to January. The average rate for households' new deposits in bank accounts was 1.22 percent in February compared to 1.36 percent in January (revised figure). Interest rate and growth rate, lending to households and non-financial corporations

On the other side, from the banks, growth of loans for households from monetary financial institutions continued to drop in February. The growth rate in February was 5.0 percent, compared to 5.1 percent in January. In February 2011 the growth rate was 7.6 percent, and has shown a decreasing trend during all of 2011.

At the end of February households' borrowing from MFIs amounted to SEK 2 661 billion. This is an increase of SEK 126 billion compared to the corresponding month last year. The largest part of households' loans consists of housing loans, which in February amounted to SEK 2 137 billion and had an annual growth rate of 5.2 percent. Of these loans, 52 percent had floating rates, which is about the same as in January. Compared to February of the previous year, housing loans have increased by SEK 106 billion.

The remaining part of household lending consists of, among other things, loans for consumption that often lack security and loans to farmers where agricultural buildings comprise the security.  Households' loans for consumption amounted to SEK 163 billion and loans with security of agricultural buildings amounted to SEK 165 billion.

MFIs' lending to non-financial corporations amounted to SEK 1829 billion. The annual growth rate was 6.0 percent, a decrease compared to January when the growth rate was 6.6 percent. The growth rate was 1.9 percent in February of 2011.
News source: Statistic Sweden

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