Response to interpellation 2024/25:241 on the ban on list rates

Statsrådet Niklas Wykman (M)

Madam Speaker! I have been asked if I will stand behind the Social Democrats' proposal to ban list rates.

Strong consumer protection and that consumers can make active choices in the banking market and have the opportunity to seek better terms is important, not least in a situation where household finances are pressured. It is not given that a ban on list rates gives consumers a stronger bargaining position against the bank.

The government is actively working to strengthen consumers' position in the banking market.

In December 2022, the government commissioned the Swedish Financial Supervisory Authority (Finansinspektionen) to analyze measures to strengthen consumers' position in the banking market. The focus was on interest rates and fees for mortgage loans and savings accounts. The assignment was finalized in May 2024.

In its report on the assignment, the Financial Supervisory Authority identified measures that can strengthen consumers' position and provide them with better conditions to compare terms and negotiate with their bank. It concerns the fact that, moving forward, banks shall remind their customers well in advance that an interest discount, which usually relates to a list rate, is expiring. Today, time-limited interest discounts on mortgage loans can expire without the bank informing about this, which can lead to large groups of customers receiving a higher interest rate than if they had negotiated with their bank. The Financial Supervisory Authority is continuing to work on that issue.

In addition, the Financial Supervisory Authority will produce simple and clear information and guidance on its website to make it easier for consumers to compare their terms and influence their interest rate.

Within the framework of the same assignment, the Financial Supervisory Authority announced regulations during the autumn of 2023 which mean that amortization documents shall be digital and that they shall be submitted without delay. I welcome this. This applies from September 1, 2024, and means that it has become easier to move one's mortgage.

The Government recently decided on a referral to the Council on Legislation with a proposal for a new rule on interest rate difference compensation upon early repayment of a fixed-rate mortgage. The proposal aims to strengthen consumer protection, increase competition in the mortgage market, and reduce the barriers for consumers who need to fix their interest rate. The proposal entails that, in most cases, it will become less costly for consumers who have fixed their interest rate to, for example, change banks.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Mikael Damberg (S)

Madam Speaker! I would like to begin by thanking the Minister for the answer.

The background to the interpellation is that it has become more expensive to live in Sweden. Inflation and the cost crisis have entailed increased costs for food, interest rates, and housing, while wage development has not kept pace in recent years. The result is a tougher economic situation for ordinary people, who have found it more difficult to make their everyday finances work.

At the same time, the margins of the Swedish major banks on mortgage rates have increased. The banks have made large profits during the cost crisis, and most of all, the banks' interest nettos have grown. It is well documented that the banks are quick to change their lending rates and somewhat slower to change their deposit rates when market rates increase.

During 2023, ordinary households paid on average almost three times as much of their disposable income in interest payments compared to the years before the crisis. This means a great deal for ordinary families all over Sweden. What has happened is that the banks' so-called gross margin has continued to increase, actually even during the latest quarter.

The Swedish Financial Supervisory Authority has pointed out that the banks' use of list rates makes it difficult for consumers to understand the interest rate setting. The banks offer individually negotiated discounts, but first, the mortgage borrower must take the initiative to negotiate their interest rate. However, it rarely becomes a real negotiation, many people experience, because the bank speaks about what one gets.

One reason why the customer has difficulty forming an opinion on what constitutes a good interest rate in the negotiation is that the list rates differ significantly from the rates that the bank offers other customers. Furthermore, the gap between average rates and list rates has increased over time, which reduces the value of interest discounts in reality.

The Swedish Financial Supervisory Authority notes that reference rates are a major problem. Then it is noted that the reference rate has played out its role towards the consumer. I believe that the Swedish Financial Supervisory Authority has a point here. When I listen to the Minister for Finance, it sounds a bit as if the situation is a bit more unclear. I can have respect for that. But my conclusion is still that the reference rates benefit the banks and create an ambiguity for ordinary people.

People are demanding a reasonable interest rate setting in a difficult economic situation. That the market is clearly not functioning completely optimally has Niklas Wykman previously described, and the Finance Minister has also underlined this earlier this year.

That is why we Social Democrats have proposed several measures to make it easier and cheaper for ordinary people to negotiate with the bank, to change banks, and to increase competition in the sector.

One of the proposals we have highlighted is to prohibit banks from using list rates in order to strengthen consumers' position and press down interest costs.

I still want to repeat my question in the interpellation to the Minister for Finance. Is it not reasonable to ask whether there could be a point in banning the list rates in order to benefit consumers in their relationship with the banks?

The speech at riksdagen.se, in Swedish (opens in a new tab)

Statsrådet Niklas Wykman (M)

Madam Speaker! Thank you for the question, Mikael Damberg!

It is clearly an important discussion. Households have been very pressured by inflation and the subsequent interest rate increases. It is still the case that one has a higher price level than one previously had.

Some have been compensated for it. For example, the government has actively made decisions to support the economically most vulnerable families with children. Others have received compensation through automatic indexation of various types of benefit and transfer systems. But many workers and many pensioners have experienced their income or pension being eroded.

A good deal of the inflation that the government inherited is due to circumstances that, if one is to be honest, lie outside the control of Swedish politics, with anxiety and misery in the rest of the world, or are consequences of an economic policy that has been pursued in large parts of the world.

Another problem is more home-grown in Sweden. This concerns, for example, the large-scale destructive destruction of our energy market which has been ongoing for a longer period and made us very sensitive to disruptions. Some is imported, some problems we have created ourselves. We are handling them step by step.

We have returned to price stability in the economy. I share Mikael Damberg's view that price stability is central to achieving a good economy and sound conditions. It is good that there is a consensus on that. Then one can have slightly different opinions on the exact choices to be made.

When we look at the banking services, one must conclude that for a long time, far too little has been done. Now, measures that make the customer stronger against their bank have finally been put in place. This applies in particular to the notice regarding the amortization basis.

It was previously a situation where one could experience that the bank sat on that information, which made it more difficult to change banks when one was dissatisfied. I have been very clear from my side that we want to see this happen. I am glad that it has now happened and that one has in that way received a significantly stronger position as a bank customer so that one can switch.

We have now put the rules regarding interest rate compensation in place. It makes it more economically advantageous for the person who needs to break their fixed-rate mortgage relative to the situation as it is today. It is a welcome step to strengthen the customer.

Quite a lot is being done in the right direction here. Of course, continued challenges remain in a rather special market, which one must still say the banking market is.

The position shifts that are now in the debate are welcome. It concerns, for example, as I pointed out in my response, that the banks shall provide clear and distinct advance information: Your interest discount is about to expire. It also strengthens the consumer.

I have no closed doors on the issue. We shall always safeguard financial stability, order and decency, and strong consumer protection in Sweden. I am intuitively not as convinced as Mikael Damberg seems to be that a ban on a type of information, namely the list interest rate, is the right way to go.

I do not have a completely closed door to that. But the list rate also provides a type of information to the customer. It is very important that average interest rates are reported. There are very clear regulations for how interest rates should be reported generally. There is very clear information on the internet about average interest rates in different banks. One can check this at konsumenternas.se.

Interest rates also provide some kind of information. If one is above them, then one is very high. They have some kind of informational value. Then one can possibly discuss whether the name is particularly good.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Mikael Damberg (S)

Madam Speaker! The Minister for Finance gives a picture of the government having compensated and helped groups through the crisis. There, we perhaps have a slightly different picture.

I think the government has been quite passive. Much of the support that has been given in the form of tax cuts or other changes has benefited those with high incomes more than the most vulnerable.

I was almost a little provoked by the fact that the Minister mentioned precisely the vulnerable child families, because we have a situation where the government is de facto lowering the compensation for the most vulnerable child families in the budget that we discussed earlier today. But that is another matter.

Let me return to the question where we seem to agree that there are still problems in the banking market today. Customers experience that there is a disadvantage and that competition does not always work. At the same time, I appreciate that a number of things are moving in the right direction. It is good that the government is continuing the investigation that the Social Democratic government commissioned regarding the interest rate differential compensation. It makes it easier and cheaper for most consumers in the future to move fixed-rate loans. That is good, and it is wise that the Financial Supervisory Authority has introduced a reminder for when interest discounts expire. I believe that many customers are not aware, and then they may feel cheated afterwards.

It is good that the amortization statement is being digitized. It is a key issue. We have seen that it is often the case that those who have requested an amortization statement from an existing bank receive a better offer from the bank. When it goes faster and more smoothly, it can give the person negotiating an opportunity to press for more.

I am a bit surprised that the Minister for Finance still does not want to have a serious discussion about average interest rates instead of list rates. The Financial Supervisory Authority has, in fact, advocated for the use of average interest rates over list rates.

The Director General of the Financial Supervisory Authority has said that they can see that the interest discounts have grown so large that the list rate has played out its role towards the consumer. Therefore, it is better to compare oneself against the bank's average interest rate.

Villaägarna also want to see list rates replaced in favor of average rates. They have gone so far as to call the list rates misleading. That says something about the fact that there is a discussion about this.

Once again, I say that the government is taking a passive stance; one does not close any door. But do we not have a problem today that many customers still pay too much to the bank because competition is not functioning as it should? In that case, I expect a slightly more proactive Minister for Finance who comes with new initiatives to strengthen the consumer's position, increase competition, and thereby create better conditions for the consumers.

I can also state that Villaägarna thinks that the state-owned bank SBAB should be used to further press the interest rates. Here, I find it incomprehensible that the government is not acting. We have proposed that SBAB, for example, should offer salary accounts and press the terms even further. But here, there seems to be an ideological deadlock from the government's side. Had one been intent on increasing competition in the mortgage market, one would, with SBAB's help, facilitate things for mortgage customers, not open up to selling off the state-owned bank and thereby risk reducing competition even further and thus making it even more expensive for mortgage customers.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Statsrådet Niklas Wykman (M)

Madam Speaker! First and foremost, I am pleased with the positive feedback from Mikael Damberg. It confirms much of what we are now doing as correct. The amortization base is one such part. The interest rate differential compensation is another such part. The result of the assignment we gave to Finansinspektionen is a further part of this. In total, it is a rather heavy package to strengthen the consumers' position.

It stands somewhat in contrast to Mikael Damberg describing that we take a passive stance, but each is of course free to describe this however they wish. But it is good that we agree that we need to strengthen Swedish consumers, that consumer protection should be good, and that we should have access to good information.

I still think that one can sort things out a bit. I don't close any door to what Mikael Damberg says, but to think that the information about the list rate is not the best tool, does not give a complete picture, is not the same as necessarily wanting to land in Mikael Damberg's position of wanting to ban the information. Despite everything, the list rate adds a type of information to the consumer. If one is above the list rate, one still has some kind of signal that one is high.

The average interest rate says more for many, but it does not say everything for everyone. Many consumers are also aware that they are in a situation with higher risk where they cannot be offered the average terms. They understand that they need to pay a little more to get a loan. People have an understanding of this. To then land on the conclusion that one strengthens the position for all consumers by prohibiting a certain type of information, I am not sure. That must be tested carefully.

In the other scale, it is important to remind that there is a broad consensus on the information that Mikael Damberg is requesting, the average interest rate. Mikael Damberg quotes the Swedish Financial Supervisory Authority regarding the fact that most people are relatively close to an average. In that case, the average interest rate is more valuable information. Therefore, that information is available on, for example, konsumenternas.se. That page lists all banks and all average interest rates with all maturities offered. I last looked today. It is not a question of information that does not exist, but it is there on sites selected for the consumer.

The Swedish Financial Supervisory Authority describes a part of its work. It is possible that the Swedish Financial Supervisory Authority could do even more than, for example, an individual bank can do. They can, for example, weigh average interest rates for different parts of the country, the whole country, different age groups, and so on.

Basically, I share the view that there is more to be done, and such work is ongoing, so that the consumer shall have as good information as possible. Then, it is obviously important that one does not drown the consumer in information, but that the consumer instead receives the most valuable information in order to be able to negotiate with their bank. That is what the mandate to Finansinspektionen has been about, and that is what Finansinspektionens work now entails. The information that Mikael Damberg requests regarding average interest rates is clearly reported per bank and per maturity, and is fully public for everyone who wishes to take part.

To go from here to landing on that one should ban a type of information is a big step. List rates, despite all their flaws, can provide information for some consumers but perhaps not necessarily all. I rather share the perspective that list rate might be a bad word to describe what it actually is about.

We have a good discussion here, and I do not think we will be far apart when this takes shape.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Mikael Damberg (S)

Madam Speaker! There is a part we agree with, but it is not a problem with the choice of words regarding the list rates.

The big problem that the Minister for Finance does not seem to want to take seriously is that competition is weaker in Sweden than in many other countries. Swedish mortgage borrowers pay too much to the bank on their mortgages.

Only during the cost-of-living crisis - the interest rate shock - have the largest banks received approximately 80 billion extra in profit. At the same time, ordinary families are being brought to their knees. That is not a small amount of money in the wallet for an ordinary family that has borrowed for a villa or a condominium.

Then one cannot say that it doesn't matter whether one uses list rates or average rates. Yes, because then the bank must justify to you why you should receive a worse rate than others. As a customer, in such a negotiating position, you get a stronger position to stand on to get a better rate than the one the bank offers. It is not just a question of word choice, but it is about a negotiating position against the bank.

That is perhaps why Villaägarna think it is a good proposal, and that is perhaps why the Director General of the Financial Supervisory Authority says that the list rates have played out their role; they do not work for the customers. It is strange that the authorities see this, Villaägarna see this, but the Minister for Finance would prefer to change the word list rate to something else and not engage in a discussion that could mean that the customer is strengthened.

I can agree with the description of the problem that this will not solve all the problems. What solves the problems for most mortgage customers is increased competition. In that case, there are all the possibilities to use the state-owned bank SBAB to, for example, offer salary accounts, increase competition, and improve the conditions. But here, unfortunately, the government seems to be ideologically blinded and does not want to take the side of the mortgage borrowers.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Statsrådet Niklas Wykman (M)

Madam Speaker! Mikael Damberg leaves many in great confusion because he tries to paint a picture of a conflict that fundamentally does not exist. Average interest rates are already reported very transparently. One can compare for every bank and for every loan term. It is information that already exists. It is not information that anyone is trying to withhold; rather, it exists and is reported very clearly. With a few clicks on a mobile phone or computer, one has it quickly in front of them. This applies to all banks and all terms.

It also becomes confusing because the discussion has often concerned the fact that the interest on deposit accounts did not keep up, which is a completely different discussion. When it comes to this, more competition would certainly be helpful.

We also have the question of SBAB. There, one must weigh in the financial stability. The state has previously used SBAB, and it has not necessarily ended particularly well. The state later had to reintroduce a long series of regulations regarding how much one may borrow, amortization, and other things to recreate the stability that existed once upon a time, before politics took liberties at the expense of financial stability.

Fundamentally, however, this is an interpellation debate, and we have democracy. One must hold each other accountable, and ideas should be clashed and contested. I think it is good that Mikael Damberg and the Social Democrats are raising this discussion.

The government has given these assignments to the Swedish Financial Supervisory Authority. We hear what they say about list rates and fully share the view that the average interest rate provides better information for most. It is good that it is available.

When it comes to the list rate, I have no specific proposal. It can rather be about knowing that one is a bit away from the average and wondering what one can expect to receive. The average interest rate does provide important information, but to forbid other information is not necessarily the right way. Not all people are average, and I believe even Mikael Damberg can imagine a little individual variation.

The interpellations debate was hereby concluded.

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