500,000 Swedish homeowners may be forced to move as central bank announces doubling of interest rates
Sep 26, 2022 - 01:22 AM
LONDON (AA) – Half a million Swedes may have to move out of their homes because of an announcement by the central bank that it will increase interest rates, according to a leading Swedish survey.
Homeowners will be affected because the bank, the Riksbanken, will soon carry out its largest interest rate increase to 1.75%, since the 1990s. The rate will be doubled when compared to the current rate.
A joint survey by Swedish pollster, Novus, and mainstream broadcaster, SVT Nyheter, found that one-third of Swedes will have to cut household expenditures to cope with the increase, raising concerns about how Swedes, in general, will handle higher costs because of the rate hike.
“Now we will have to count the expenditure even more,” Lisa Andreasson Floman, a homeowner, told SVT Nyheter.
The survey showed that 7% of Swedes will be forced to move out of their homes because they will not be able to cope with a doubling in interest costs that will push mortgage payments higher.
Torbjorn Sjostrom, CEO of Novus, told SVT Nyheter that “7% may sound a little, but it’s about half a million adult Swedes.”
When Novus asked how the increase may affect households, 4 out of 10 respondents said they could afford the higher cost.
Six in 10 people said they could afford a doubling of their interest rate in an SVT/Novus survey in February.
The economic crisis in Sweden, however, has not reached its peak, hence a large number of Swedes still believe they will be able to afford the costs, said Sjöstrom.
House prices are falling but household debt remains high compared to 30 years ago, the survey showed.
Factors that led to large debt are high housing prices, low-interest rates and poor access to rental rights, according to SVT Nyheter.