Swedish Mortgage Shift Saps Trust in Rate Forecasts
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Swedish house buyers shifting to adjustable-rate mortgages from fixed-rate loans means the Riksbank can cool the economy with fewer rate increase than it currently predicts, according to Danske Bank A/S and SEB AB.
Home loans tied to money-market rates now account for more than 60 percent of the market, up from less than 40 percent at the start of 2006, when the bank last started raising rates, according to Statistics Sweden. Economists say the Riksbank may underestimate its power, casting doubt on its prediction that it will need an average borrowing cost of 2.1 percent by the third quarter of next year and 3.8 percent two years later.