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Aim of Paper: Which factors affect the choice of interest rates?

Factors behind interest rate decisions among apartment buyers in Stockholm Maria Hullgren, Institute of Technology, Stockholm. Aim of Paper: Which factors affect the choice of interest rates?

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Aim of Paper: Which factors affect the choice of interest rates?

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  1. Factors behind interest rate decisions among apartment buyers in StockholmMaria Hullgren, Institute of Technology, Stockholm Aim of Paper: • Which factors affect the choice of interest rates? • Investigate whether the results from previous international research also apply to Swedish conditions and whether there are additional factors of influence which are significant. • See whether different types of Swedish households choose different interest rate lock-in periods.

  2. Background to survey; Price changes(Data from Mäklarstatistik)

  3. Indebtedness of households 2004-2008 2004 Total loans of households=SEK 1,400 billion. Of these, about 75 per cent, or SEK 1,050 billion, was security in the form of small houses. 2008 Total loans of households=SEK 2,125 billion. Of these, about 80 per cent, or SEK 1,7 billion, was security in the form of small houses.

  4. Mortgage rate changes & implications for households • Change in the type of home loan lock-in period that households have chosen. In 2004, 54 per cent of new lending took place at adjustable interest rates. In 2008 this share had risen to 62 per cent. • During the period 2004-2008, home loan interest rates have fluctuated substantially in Sweden: adjustable/three-month rates have been at a minimum of 2.44 per cent (2005) and a maximum of 6.40 per cent (October 2008). Households may have become more sensitive to changes in the interest rate position and the situation in the real estate market.

  5. Earlier findings:

  6. Earlier findings, cont:

  7. Survey, spring 2008: Data Criteria: Have purchased an apartment; not a detached or terraced house. Have taken out a loan in connection with the purchase. And that the apartment should be located in the centre of Stockholm. Interviews: 30 households In person or by telephone within a fortnite from taking possession of property. Duration: 20-30 minutes

  8. Survey questions Purchase price Cash down payment and loan portion respectively How much fixed – adjustable rate? How did you come to a decision about which to choose? What factors haves had an influence? Previous experience of home purchase and choice of interest How long do you plan to live in the new home? Monthly fee Gross income of the household Amortization Age Number of children in the household

  9. Basic data about the interviewees:

  10. Basic data; contin.

  11. Findings:

  12. Findings:

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