4 ms·

Eh? I just looked at the list rates of a few of the Swedish banks and all the short term interest (3 month fixed) were below 3% while the 2+ year fixed were 3.2

by pathy 13y ago

Eh? I just looked at the list rates of a few of the Swedish banks and all the short term interest (3 month fixed) were below 3% while the 2+ year fixed were 3.2% and up. Quite far from 4% and if you have decent finances you can get lower than that. Even at 4% it is a far cry from the rates of days of old. Banks are profitable, sure. But also remember that the credit loses on mortgages in Sweden are practically zero, that contributes greatly to profitability. Lastly, why would it be a fair system to have to lend directly from the central bank, you would not pay REPO rate as individual borrowers are significantly more risky than huge banks...

bjourne 13y ago
See this diagram for historical mortgage rates: http://hypotek.swedbank.se/rantor/historiska-rantor/historik-bostadsrantor-2008-2012/index.htm http://hypotek.swedbank.se/rantor/historiska-rantor/historik... But note also that banks charge various additional fees and often doesn't allow you to borrow the whole sum for the lowest interest rate. So the effective rate is higher than advertised. > Banks are profitable, sure. But also remember that the credit loses on mortgages in Sweden are practically zero, that contributes greatly to profitability. > Lastly, why would it be a fair system to have to lend directly from the central bank, you would not pay REPO rate as individual borrowers are significantly more risky than huge banks... You can't in the same breath both say that mortgages are incredibly safe in Sweden and claim that they are significantly more risky than banks. Yes it makes sense that interest rates are higher for mortgages than when you lend "in bulk." But not that much higher. TFA claims 15% in profit margin which is pretty good for just shuffling money around. My point is that there is no magic, or uber-Swedish intelligence that makes the banks financially sound and profitable which the Economist seem to think. It is that they get away with overcharging their customers, the lenders, for the meager services they provide.

by pathy 13y ago

bjourne 13y ago

See this diagram for historical mortgage rates: http://hypotek.swedbank.se/rantor/historiska-rantor/historik-bostadsrantor-2008-2012/index.htm http://hypotek.swedbank.se/rantor/historiska-rantor/historik... But note also that banks charge various additional fees and often doesn't allow you to borrow the whole sum for the lowest interest rate. So the effective rate is higher than advertised. > Banks are profitable, sure. But also remember that the credit loses on mortgages in Sweden are practically zero, that contributes greatly to profitability. > Lastly, why would it be a fair system to have to lend directly from the central bank, you would not pay REPO rate as individual borrowers are significantly more risky than huge banks... You can't in the same breath both say that mortgages are incredibly safe in Sweden and claim that they are significantly more risky than banks. Yes it makes sense that interest rates are higher for mortgages than when you lend "in bulk." But not that much higher. TFA claims 15% in profit margin which is pretty good for just shuffling money around. My point is that there is no magic, or uber-Swedish intelligence that makes the banks financially sound and profitable which the Economist seem to think. It is that they get away with overcharging their customers, the lenders, for the meager services they provide.