Opening The Gates to The Swedish Mortgage Market - A Study on How the Recent Emergence of Mortgage Credit Companies Affects Real Interest Rates in Sweden

Abstract: This paper examines the impact of the emergence of mortgage credit companies (MCCs) on real mortgage interest rates in Sweden. Our results reveal that MCCs exert downward pressure on average mortgage interest rates for the whole market and monetary financial institutions (MFIs), with statistical significance for most interest rate fixation periods. Additionally, the paper investigates the influence of policy rates on mortgage credit companies' ability to affect mortgage pricing. We conclude that higher policy rates limit MCCs' ability to influence pricing, primarily for fixed-rate mortgages. Our findings highlight the role that mortgage credit companies play in enhancing mortgage market competition and provide insights into their sensitivity to changes in policy rates. In a broader context, our study and its results contribute to the current debate on mortgage market competition in Sweden.