Sweden: Slowdown in Household Loan Growth Continues, Commercial Borrowing on the Rise: July 2023 Financial Market Insights

The latest data released by the Swedish Statistics Bureau (SCB) highlights a continued deceleration in the annual growth rate of household loans from Monetary Financial Institutions (MFI) during July. The growth rate for residential loans remained at a modest 1.3%. Conversely, lending to non-financial businesses experienced a growth rate of 7.0% during the same month. Average lending rates saw an upward trajectory for both households and non-financial enterprises.

Key Developments in July 2023 Household Lending The annual growth rate of MFI’s total lending to households reached 0.9%. Residential mortgages accounted for 83% of total household lending. Consumer loans, constituting 6% of household debt, experienced a growth rate of 0.6%. Lending to non-financial businesses in July 2023 exhibited a growth rate of 7.0%. Overall, lending from MFI to households and non-financial enterprises amounted to 7,949 billion Swedish kronor. Of this, loans to households accounted for 62% (4,914 billion kronor) and loans to businesses 38% (3,035 billion kronor). Lending to households and non-financial businesses, annual growth rate Unnamed Residential loans extended by entities other than MFIs, specifically housing credit institutions, observed an annual growth rate of 0.2%. At the end of July, housing credit institutions constituted 1.2% (48 billion kronor) of the total residential loans of households, amounting to 4,114 billion kronor.

Deposits and Monetary Aggregates MFI’s total household deposits reached 2,677 billion kronor, with demand deposits comprising 79% (2,119 billion kronor). In July 2022, demand deposits constituted 89% of the then total household deposits of 2,675 billion kronor. The aggregate of currency and coins held by the public, previously defined as the M0 money supply measure, totaled 61 billion kronor in July 2023. The M3 money supply reached 4,849 billion kronor, showing an annual growth rate of -4.4%.

Interest Rates on Lending and Deposits In July 2023, the average interest rate for new residential mortgage agreements for households was 4.49%. The average rate for variable-rate residential mortgages was 4.57%. For household mortgage agreements with fixed terms between 1 and 5 years, the average interest rate stood at 4.11%. This compares to 3.45% in July 2022. The average interest rate on new lending agreements to non-financial businesses was 5.51%, a notable increase from 2.64% in July 2022.

Average interest rates for new deposits on household bank accounts in July reached 1.88%. For accounts with fixed terms or limited free withdrawals, the interest rate was 2.80%. For new deposits on bank accounts held by non-financial businesses, the average interest rate was 1.91%. The corresponding rate for accounts with fixed terms or limited free withdrawals was 3.30%.

This financial market statistic primarily covers Monetary Financial Institutions (MFI) and also includes emerging players in the residential mortgage market, known as housing credit institutions. Unless otherwise specified, this news piece focuses on MFI in the statistics.

The report encompasses balance sheet statistics (including lending and deposits), interest rates, and the evolution of monetary aggregates. Quarterly publications also feature international banking statistics.