Not so long ago, the Ricks Bank had a new meeting to decide what the repo rate would be and the decision was then to set a negative interest rate. This was a historic decision in Sweden. The new repo rate is now -0.10 per cent and is expected to be very low for a good while to come.
A low repo rate paves the way for very cheap loans and when the interest rate is even negative it is difficult to get much cheaper loans. It is especially evident on the mortgage that interest rates are so low. Not because mortgages are necessarily so much cheaper than, for example, private loans, but since this is a very common loan and it is often a large loan, the biggest difference is in the wallet.
Even before, it was obviously very low mortgage rates because we had a very low interest rate level in the country and we had a repo rate that was close to zero and then also at 0% for a while. Now that it has been lowered a little further it does not make any huge difference, but it still causes the banks to lower their interest rates slightly. So it is a good location for those who have a mortgage.
Good location for both variable and fixed interest rates
If you have a variable interest rate on your mortgage, you can probably continue on the same track without any major danger. The Ricks Bank itself predicts that the interest rate will remain very low until the second half of 2016, and it can probably be conceived that it will not be raised very much either. So you have a pretty secure future in the near future and can enjoy very low interest rates.
The second choice is to tie up their mortgage and it is also a reasonable alternative as the fixed interest rates are really low at the present time. You have the opportunity to tie up your mortgage in the long term, maybe 5 – 10 years, and get a good interest rate that in the future will probably feel really affordable. You may of course pay a little more for your loan right now when the interest rate level is generally at the bottom, but in two, three or four years it can start to pay off seriously.
Several types of loans are getting cheaper but maybe not all
Because mortgages are so large, this is also where you see the most difference in your wallet. A mortgage rate of less than 2% gives really low housing costs and then you have plenty of money to save for a buffer and it can also be that you have money to repay on the loans so that they shrink, which is an investment in itself. longer term. However, it is not only mortgages that become cheap but also private loans and other loans.
However, the repo rate is negative, however, probably not really noticed as much on smaller loans, for example private loans on smaller amounts or the so-called SMS loans. Lenders who lend in the form of these loans rarely adjust their loans in the same way in relation to the repo rate. It is conceivable that these lenders have also lowered their prices but do not expect such loans to be particularly much cheaper.
Other aspects of negative interest rate
The interest rate affects the loans, but it also affects quite a few other things. For example, it affects how much interest we can get in a savings account when we deposit our money. For quite some time it has been difficult to find a good savings account with a reasonable return just because the repo rate has been so low. It doesn’t get any easier now.
Negative repo rate sounds pretty bad, but it will probably not be such a huge difference now from how it was in the fall. In the future, just as before, it will be very difficult to find a good savings account. The big banks basically have zero interest in their accounts, so try to find a better alternative.
A negative repo rate practically means that the banks must pay money in order to have their money deposited with the Swedish central bank, which they obviously do not really like. It is conceivable that they choose to charge this extra cost to us customers by introducing a negative interest rate on savings accounts and payroll accounts etc. It could mean that it costs us money to have money deposited into our accounts with the bank.
Right now, no bank has introduced negative interest rates on their savings accounts, and that’s probably for a variety of reasons. One of the reasons is certainly that you do not want to make people upset or scare customers – which could probably do such a thing. If the repo rate is lowered further, it is conceivable that such measures will come, but for the time being, the banks are keeping their skin and waiting.
In order for you to get some return on your money, you should actively look for savings account with a little reasonable interest rate. Unfortunately, right now, interest rates are just a few percent, which is bad. You can look at other options for your savings such as stocks and funds, short-term securities or similar. Think about what you believe in and what suits you and your savings.