Fall In Lending Rates Helping Increase In Consumption Borrowing

Swedish household lending from MFIs rose +0.3% Y/Y in January (vs +0.4% prior). This is the lowest annual growth rate since the series began recording data in 2006. However, the weakness has been driven by slowing growth in mortgage lending, which accounts for 83% of total household lending. Looking specifically at lending for consumption growth, a more positive trend is apparent.

• Mortgage lending, grew +0.5% Y/Y (vs +0.6% prior), while consumption lending growth was +2.5% Y/Y (as in December, and up from a low of 0.4% Y/Y in June 2023).
• The uptick in lending for consumption purposes could be explained by the sharp fall in lending rates seen at the end of 2023/start of 2024 (see chart). Increased rate cut expectations, helped by the Riksbank's shift in guidance at the latest monetary policy meeting, will have driven this fall.
• From Stats Sweden: "The average interest rate on new agreements for mortgages to households was 4.67 percent. The average floating rate on mortgages was 4.83 percent".
• Tomorrow's Economic Tendency Indicator and Thursday's Retail Sales data will provide more information on the consumer outlook in Sweden.