Bank interest rates and lending, Q3 2013 (Summary)

Summary

In this report, Finansinspektionen (FI) describes the banks' adaptations to higher capital requirements and the effects on households and non-financial firms. The calculations show that the effects on the lending rates are small. FI's quarterly report on the banks' mortgage margins shows that the margins decreased slightly during the third quarter.

The major Swedish banks continued to adapt to the higher capital requirements and are therefore well-capitalised today. Their capital adequacy continued to increase during the year, in part due to increased capital and in part due to a decrease in the risk-weighted amount of the assets that must be covered with capital.

FI's standardised calculations show that the effects on lending rates to households and non-financial firms are small, even though the calculations are based on the assumption that households and firms carry the entire cost. In addition, the higher requirements contribute to a more stable financial system, which has positive effects on the economy.

The margins on mortgages continued to decrease slightly during the third quarter. Both the banks' funding costs and lending rates for new mortgages fell. The gross margin decreased from 1.21 to 1.18 percentage points. The net margin, in which other costs associated with mortgages are also deducted, decreased to 0.55 percentage points.

Swedish banks have not decreased their lending, even though Swedish authorities have communicated higher requirements than other countries. Growth in lending to Swedish households for housing purposes was 5.1 per cent at the end of the third quarter. This is a marginally higher growth rate than in the second quarter. Growth in Swedish corporate lending was 1.0 per cent at the end of the third quarter, which was slightly slower than in the previous quarter.

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