Rising margins on mortgage loans – the Today’s Industry

Banks ‘ bolånemarginaler continues to rise. In september reached a gross margin 1,67%, which was the highest level since figures began to be collected in 2002. It shows statistics from the Swedish financial supervisory authority.

Each quarter publish FI figures on the banks ‘ gross margins, that is to say, actually lending rate minus funding costs, on the mortgages. In september landed bolånemarginalen on 1,67%, which can be compared with 1,57 percent in June. The figure was also the highest since FI began collecting statistics in 2002.

"I think there are two things that are behind, that they risen so much that it has made. The first is that the requirements on how much equity the banks hold has increased a lot. On that capital to shareholders have a 10-15 percent return on equity and it is clear that then you have to have higher margins," says Tor Borg, chief economist at SBAB.

According to the Tor Borg has the competitive pressures in the mortgage market also declined in recent years.

"I think there may be many different explanations for. Among other things, that there is no feedback from any authority to increase the competition, but the authorities would rather that the banks will lend less. Then, I also believe that these changes you have done with the requirements, lack of and so on creates lock-in effects. It has become bökigare to change bolåneleverantör," he says.

Is there a connection with the low repo rate?
"It would possibly be a third factor. When we are down at this ultra-low interest rates, so it is not possible to earn some money on the deposit. It’s clear that you might be trying to compensate for it on the stock", says Tor Borg.

do you Think total household mortgage lending margins will continue to rise?
"I think it is very much about what happens when it comes to capital requirements. Will the additional capital requirements then there will be further upward pressure on these margins. If interest rates rose from these negative levels, it would perhaps be able to subdue the margins a little bit, but it’s hard to say", says Tor Borg.

to the four major banks snitträntor in October, SEB was the lowest with 1.52%, while Handelsbanken had the highest level of the average rate of interest by 1.66 per cent.