A new rule on interest compensation - reduced obstacles to early repayment of housing loans

Rashid Farivar (SD)

Mr. Speaker! Tonight we are debating the Committee on Civil Affairs' report on the government's proposition 2024/25:97 A rule on interest compensation – reduced obstacles to early repayment of housing loans, which primarily aims to reduce the obstacles for consumers who want to repay their fixed-rate housing loans early. The proposal represents an important step toward strengthening consumer protection, increasing competition in the mortgage market, and creating better incentives for consumers to fix the interest on their loans.

We in the Sweden Democrats support the government's proposal. I therefore move for approval of the committee's proposal for a decision and rejection of the motions from the Social Democrats, the Centre Party, and the Green Party.

Mr. Speaker! Buying a home is one of the biggest financial transactions in many people's lives. In Sweden, approximately 65 percent of households own their home, and 80 percent of these have a mortgage that runs over several decades. When it comes to mortgages, the interest rate can be either variable or fixed. A fixed interest rate provides advantages by protecting the borrower from interest rate hikes but does not offer the same opportunity to take advantage of a potential fall in interest rates.

According to reports from Statistics Sweden, SCB, the proportion of housing loans with variable interest rates is at a record level. This proportion was over 70 percent at the beginning of 2025. For households with small margins, however, interest rate hikes can mean significant economic strain. At the same time, the average interest ratio, that is, the proportion of income that goes to interest costs, has more than doubled since 2021. This underscores the importance of households having the opportunity to plan their finances in a long-term and predictable way, for example by fixing their loans.

Consumers always have the right to repay their loan prematurely, but when the interest rate is fixed, the bank can demand a mortgage interest compensation. This compensation is calculated according to a standard rule that has been criticized for providing lenders with overcompensation for lost interest income, rather than for actual costs. This has led to high compensations that have hindered both consumer mobility and competition in the mortgage market. Among other things, Finansinspektionen has expressed criticism of the current model, which does not always reflect the actual loss for the lenders.

Mr. Speaker! The Sweden Democrats see a need to reform the rules to reduce the obstacles for consumers who want to refinance their loans, but we also believe that the purpose of the interest rate differential compensation should continue to be to compensate the lender for actual losses, not to protect the lenders' investments.

The interest rate differential compensation should also be compatible with good lending practice. The new rule should be based on a flat-rate model that provides predictability for the consumer and simultaneously improves consumer protection without overcompensating the lender.

The interest rate differential compensation has since 1992 been calculated based on a standard model based on the difference between the loan interest rate and a comparison interest rate. This system has not always been fair for consumers with poorer finances, as they often pay more in interest rate differential compensation due to higher interest rates, even though the risk that justified the higher interest rate disappears upon early repayment.

The Government proposes that the loan interest rate shall no longer be included in the calculation basis for the interest rate differential compensation. This proposal has support from a majority of the referral bodies and is judged to lead to more equitable conditions between borrowers. The proposal aims to strengthen competition in the mortgage market and facilitate for consumers to fix their loans. At the same time, it is proposed that the difference between the market interest rate at the start of the fixed period and at the time of early repayment shall constitute the basis for the calculation of the compensation.

The Government also proposes that the swap rate should be used as the comparison rate because it better reflects changes in the general interest rate environment. The swap rate is directly linked to the lender's management of interest rate risk via the derivatives market and is considered to provide a more fair and stable basis for the calculation.

Svenska Bankföreningen has however proposed that the interest on secured bonds should be used instead as it is considered to better reflect the lenders' financing costs. The Government rejects this view because secured bonds are affected by individual lenders' credit risk, which would create variations in the compensation that do not reflect the general interest level – which we believe is justified.

In summary, Mr. Speaker, the government's proposal represents an important step toward increasing fairness in the mortgage market. The proposed model, which is based on the swap rate and no longer takes into account the individual lender's interest rate, is expected to lead to lower costs for consumers and strengthen competition in the market. This will create better conditions for Swedish households to plan their economic future and hopefully contribute to a more stable and fair mortgage market.

The Sweden Democrats therefore support the proposal and move for approval of the committee's proposal and rejection of the reservations from the opposition.

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Markus Kallifatides (S)

Mr. Speaker! We Social Democrats believe that the government should return with an evaluation of the effects of the new interest rate differential compensation system, which we will most likely vote through here in the chamber. I therefore move for the approval of reservation 3 on evaluation, a joint reservation from S and MP.

For many Swedes, the purchase of a home is the single largest financial transaction one makes in their life. In that case, it is important that there are good conditions in place for those who choose to take out mortgage loans. Today, a lack of competition in the banking market leads to households being pressured by high interest rates and to the fact that mobility in the banking market is low.

Part of this is today's system for interest rate compensation, which can lead to large costs for those mortgage borrowers who want to repay their loans prematurely. In the long run, this leads to fewer people fixing their loans and to reduced mobility in the banking market.

To address this problem, the previous Social Democratic government chose to appoint an inquiry into reforming the interest rate differential compensation. That the government now chooses to proceed with proposals from that inquiry is good, but it is not enough. The interest rate shock of recent years has made it clear that more must be done to address the deficient competition in the banking market. Here, we argue that the government is doing too little.

That is why we Social Democrats have presented a number of proposals to increase competition in the banking market. We set out these in our motion. But we also demand that the government returns with an evaluation of this new system for interest rate differential compensation. The proposal that the government now chooses to proceed with, and which we stand behind, has received criticism from a number of referral bodies. It is important to follow up to ensure that the proposal actually achieves the desired effect, that is, lower prices and increased mobility for ordinary consumers.

In most cases, the new calculation of the interest rate differential compensation will lead to lower costs than the current model. With that said, however, several referral bodies point out that the costs will continue to be high for many households and that there are even instances where the new flat-rate calculation will result in higher costs for early redemption of loans. It is therefore why we demand that the government returns with an evaluation of the effects of the new interest rate differential system. The reform must lead to better conditions for mortgage borrowers and increased mobility in the banking market.

Mr. Speaker! Fundamentally, consumers' pressured situation on the banking market is due to poor competition. We Social Democrats want to strengthen competition through a more powerful SBAB. A stronger SBAB can put a completely different pressure on the market and drive change also among private actors. We want SBAB to be able to offer its customers salary and transaction accounts so that it can become a larger player on the market and put pressure on the big banks. Furthermore, we want the bank to receive new ownership directives and for the bank's return requirements to be reviewed.

In addition, we want to make the banks' interest rate setting clearer. Today, the banks try to make it unnecessarily complicated for households to understand why they receive a certain interest rate. Therefore, we want to ban list rates. With a clear average price, the banks can no longer hide behind difficult-to-understand interest rates, and it will become easier for consumers to compare banks. This increases competition and makes it easier for ordinary Swedes to negotiate with the bank.

We finally want to introduce a comparison site for the banks' loan offers. An example in the field is the Norwegian Finansportalen. There, information on prices and conditions for all kinds of financial products is gathered. The portal increases consumer power and the possibility for consumers to make well-founded decisions.

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Lars Beckman (M)

Mr. Speaker! It seems that all the speakers before me agree that this is a good proposal that lowers costs for consumers – that is absolutely excellent! My colleague in the Riksdag, Rashid Farivar, went through the matter itself in detail, so I intend to skip that part.

What is good is that the government is now lowering the consumer costs for the interest rate differential compensation by removing the individual risk in the calculation models. Just as has been said before, this primarily benefits those households that have lower creditworthiness.

One might wonder why we have a mortgage interest compensation. It is a moral question regarding the fact that the bank and the customer have entered into an agreement where it has been stated that the customer shall borrow this much money over this period. If one party, the customer, wants to break the agreement and pay off the debt prematurely, they are free to do so according to law, but then the bank must be compensated for the loss of the future income. Mortgage interest compensation is only paid for the time remaining for a fixed-rate loan, for example, if someone pays off a loan that is fixed for one year.

The new standard rule is judged in the vast majority of cases to lead to a lower interest rate differential compensation for the consumer than the current model. It also favors consumers with higher credit risk because their individual interest rate does not affect the size of the compensation.

Mr. Speaker! In area after area, the government is improving consumer policy, and so also in this area. Let us therefore rejoice over this decision!

I vote in favor of the committee's proposal in the report.

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Märta Stenevi (MP)

Mr. Speaker! In this debate, we are in agreement in large part. That is pleasant.

Buying a home is for many one of the biggest decisions, and mortgage loans are therefore of great importance for many households and constitute a large part of household expenses. The market for mortgage loans is therefore also of great importance for financial stability and real economic development.

A great deal has already been said about the proposal that we are now discussing. I want to emphasize once again that we stand behind the content of the bill, as the intention is good and a reform is necessary. But several referral bodies have also warned that the proposal will not achieve the desired effect.

Mr. Speaker! Longer binding periods essentially mean economic security with predictable costs over time, but it is impossible to predict the future. A need for a larger or smaller home can arise unexpectedly. Divorces, deaths, illnesses that affect personal finances, or the necessity of moving for work affect the need for housing, but the interest rate differential compensation counteracts mobility in the housing market. This has a negative impact on the entire functioning of the housing market.

The choice of an unlinked or linked mortgage is entirely a matter for the household to decide, but we can see that sharp and rapid changes in inflation and interest rates have far-reaching and significant impacts on household finances. Counteracting obstacles for households to link their mortgages would therefore make society and financial stability more resilient.

Mr. Speaker! Miljöpartiet supports the proposal for a new model for calculating interest rate difference compensation upon early repayment of a fixed-rate mortgage, but we believe that this is fundamentally insufficient. We see unjustified costs for many households who wish to repay their mortgage early due to lock-in effects of the current regulations. We see households whose life situation suddenly changes, where the sale of the home becomes necessary and risks leading to large costs.

Mr. Speaker! Housing is a very special product in our lives. It is not a product on the same terms as others. We therefore want to see more changes that go further and provide an actual difference and increased security in people's everyday lives. In addition to the bill, the Green Party therefore proposes further measures:

Both deaths and divorces are events that affect people fundamentally and, in many cases, also their private finances. They are events that can occur suddenly, without one having control over them, and create a life situation that becomes difficult to manage. Miljöpartiet believes that it needs to be investigated whether at least deaths, and potentially also divorces, constitute life situations where fixed-rate mortgages should be resolvable with little or no interest rate differential compensation.

Mr. Speaker! Furthermore, we note that homeowners in a time of economic uncertainty may be forced to sell their homes to reduce costs. Some of us here in the chamber – not all, but some – are old enough to remember this from the 80s and 90s and from the financial crisis in the mid-00s. Especially young people and families with children in owned housing often have large loans and are in financially strained situations. That one should then have to pay large sums in penalty fees because one is forced to sell is unreasonable.

Miljöpartiet wants to investigate whether, in connection with a sale, one should be able to avoid interest rate compensation by moving the mortgage from one home to another through a so-called security exchange. The bank then simply swaps the security for the mortgage from one property to the new one. Today, however, there is no such general rule, and it is up to the bank to decide this. We believe that the possibility for a mortgage borrower to have the right to move with a fixed-rate mortgage, naturally provided that a move is made to a home that constitutes equivalent security for the loan, needs to be investigated.

Mr. Speaker! Amortization means that households reduce their debt and loan-to-value ratio, lower ongoing housing costs, and become less affected by, for example, interest rate hikes. Miljöpartiet believes that there is a value in households having the right to make extra amortizations on fixed-rate mortgages without a penalty fee, and that this needs to be further investigated. We believe that it would have a positive effect both for individual households and for society as a whole.

Mr. Speaker! It is important that households have the opportunity to understand what the rules mean and what compensation they may be obliged to pay to the creditor. Several referral bodies consider the proposal in the bill to be difficult to understand.

Lenders already have a duty today, before the credit agreement is entered into, to inform about the lender's right to interest compensation and how this compensation shall be calculated. The lender shall also, upon request, provide information on what a prepayment of the debt entails. Since the interest compensation is complex and a situation where fixed-rate mortgages may need to be repaid prematurely can be perceived as remote when households bind fixed-rate mortgages, we believe the government needs to take the initiative to review how the lender's obligations can lead to increased information and knowledge among households regarding the possibility of exercising their consumer rights.

Mr. Speaker! KTH Royal Institute of Technology states in its referral response that there is a risk that the proposed calculation model in some cases will overcompensate lenders to an even greater extent than the current model on today's market. Svenskt Näringsliv also points out that the interest rate spread compensation in certain interest rate environments can be higher than according to the current model, even though the compensation in the vast majority of cases is expected to be lower.

The Swedish Bankers' Association states that a consequence of the interest rate differential compensation being set too low could be that lenders may come to compensate themselves for the costs that arise when certain customers repay housing loans prematurely by raising the interest rate on loans with a fixed term. It is therefore necessary that the changes are evaluated based on how they have affected the behavior of mortgage borrowers regarding the choice of fixed interest, but also based on how different groups are affected and under which situations, as well as to what extent lenders choose to compensate for the changes by raising the interest rate on mortgages. That evaluation is completely necessary, so that we know what we are doing.

I therefore move for approval of reservations 2 and 3.

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Patrik Karlson (L)

Mr. Speaker! The new model for calculating the interest rate differential compensation that we are discussing today aims to strengthen consumer protection by reducing the risk of unjustified differences between different borrowers who settle their fixed-rate loans prematurely. It also makes it easier for borrowers to plan their finances and put their mortgages out for competition, i.e., to compare banks and switch if they receive better terms. This is a reform that I warmly welcome.

Why was this reform then needed? Well, today's system for interest rate compensation has long been criticized for being unfair and restrictive. As it functions now, banks can charge very high fees when customers want to settle their fixed-rate mortgages prematurely.

A new rule on interest rate differential compensation – reduced obstacles to early repayment of housing loans

The Financial Supervisory Authority has noted, among other things, that current rules favor the banks in such a way that the fees charged are often higher than the actual costs the bank has. In other words, many borrowers are forced to pay unreasonably high amounts if their lives change and they need to settle the loan prematurely. This particularly affects those households that perhaps already have a weaker economy or a poorer bargaining position against the bank.

Quite clearly, we can state that today's model disadvantages consumers with poorer or insecure financial conditions because they often have a higher agreed interest rate at the base and are thus forced to pay more in interest compensation. Such a system is neither reasonable nor sustainable from a consumer protection perspective.

This is a well-considered and long-awaited change. Among other things, the Finansinspektionen has called it urgent to change the rules in this area.

The Competition Authority has pointed out that the inertia must be broken. Even the Swedish Bankers' Association – that is, the banks themselves – concede that it is perceived as an injustice when different borrowers can be forced to pay different amounts. There is therefore now a broad consensus also politically that change is needed. Change is now happening.

With this, I move to approve the committee's proposal and thank you for this evening.

The deliberation was hereby concluded.

(A decision was to be taken on 14 May.)

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