Mortgage Information and Consumer Understanding : A Study of Swedish Banks

Abstract: The purpose of this essay was to examine and see how communication betweenbank and customer in the Swedish mortgage market is processed. Several theoriesthat have been used in this study highlight how consumers think when they makefinancial decisions. Cognitive learning and individual differences in financial settingsare some of the many factors that are taken into consideration when the theoreticalframework was conducted. Consumption and communication theories have alsobeen used to get a better understanding of customer’s behaviors. Furthermore,financial literacy and sustainability theories have been used to get a better overallunderstanding of the issue at hand.A qualitative method was used, where semi-structured interviews with bankpersonnel were conducted to get their view on the subject. Surveys were used as acomplement to the interviews to get the consumers’ perspective on the subject aswell. The empirical results do however reveal a major gap in communication,especially regarding potential risks that are involved with taking a mortgage. Sincebanks generally have more information than customers in this process, adverseselection occurs, which in the long run contributes to market failure.Despite high levels of customer satisfaction at the time of purchase, the studyidentifies areas for improvement in effectively communicating risks and changes inthe housing market. The discussion section emphasizes the evolving landscape offinancial sustainability and CSR, urging Swedish banks to enhance transparency andcommunication in mortgage practices. The study suggests potential solutions,including third-party interventions such as regulatory guidelines, to address marketfailure and foster a sustainable mortgage market