Mortgage firm SBAB rate slash could lead others to follow suit
State-owned lender SBAB is challenging the competition by drastically sinking its mortgage interest rate.
SBAB borrowers who commit to a five-year period now get a 2.1 percent interest rate. This is even lower than the lender's floating rate, of 2.15 percent.
According to Swedish Radio News, Per Bolund, the minister dealing with financial market issues and a member of the Green party, welcomes the move, because it'll put pressure on other banks to be more competitive. But he says there's a risk that household debt will grow more, and so the government and the authorities will need to follow developments closely.
The CEO of SBAB says to Swedish Radio News the decision is part of focusing on the company's core business of mortgages.
"It won't be brilliantly profitable for us at this level of interest, but in return we get stability", says CEO Klas Danielsson to business paper Dagens Industri.
The offer runs until 19th December. But internet bank Nordnet has in the past made a survey that claims it is always cheaper to have a floating rate, in the long term, reports tabloid Aftonbladet.
Fredrik Nordquist, a lawyer at Konsumenternas ban- och finansbyrå, a foundation that gives financial advice, cautions that while the offer seems like a safe alternative - in connection with new rules for mortgage holders to repay more than they currently do (see article below) - people who are considering it should be aware of the fees they might face if they break the loan.