Staff memo: How banks' mortgage rates are affected when the policy rate changes
News, Staff memo How quickly and how much are the banks' mortgage rates adjusted when the Riksbank changes the policy rate? Does this pattern change when the policy rate is negative? This is analysed in a new study based on high-frequency data from Swedish banks between 2009 and 2025.
The analysis shows that mortgage rates are clearly, but gradually, affected by changes in the policy rate. On average, short-term interest rates are fully adjusted after one to two months, while the pass-through for longer maturities is weaker. When the policy rate is negative, the pass-through weakens – but it is not completely broken, as some previous studies have suggested.
This result has several implications for households with mortgages. For one thing, the gradual change in mortgage rates gives them some time to adjust to new interest rate levels. And for another thing, the fact that the banks react in different ways and at different speeds means that it is possible to influence the cost of borrowing by comparing interest rates.
Author: Stefan Laséen, Monetary Policy Department
Staff memos
A Staff Memo provides Riksbank staff members with the opportunity to publish ad-vanced analyses of relevant issues. It is a staff publication, free of policy conclusions and individual standpoints on current policy issues. Publication is approved by the head of department concerned. The opinions expressed in Staff Memos are those of the authors and should not be regarded as the Riksbank’s standpoint.