Low Interest Rates Lead to Record Private Debt Levels in Sweden

STOCKHOLM – The prevailing low-interest rates in the Scandinavian country, Sweden has led to a sharp increase in the debt level on households. Due to this accumulated debt burden, it has been extremely difficult for Swedish people to pay-off their consumer loans. After the Sweden Central bank’s announcement about the continuation of low interest rates in the coming month, the situation has become more complicated for people.

Since the last two decades, the short and long term interest rates have been declining continuously. Earlier in the 1990s, it was around 4-6% but now it has reached as low as -0.5% in Feb 2016. Because of this, the private debt levels in Sweden has reached a record high. In order to maintain the right inflation level in the economy, the Swedish Central Bank, Riksbank is resorting to the option of decreasing the repo rate.

As the debt burden in the economy is increasing on a large scale, Swedish people are struggling to get consumer loans from financial institutions. Also, the non-paying clients associated with many financial institutions have reached near to 20% in the first half of the year. A long period of negative interest rates has led to an unprecedented boom in private lending and people are left with no other option than to get unsecured loans. One of many websites where Swedish people find cheap loans is www.lå

The growing household debt burdens in Sweden in the last few years has contributed to increasing the home prices and it has impacted the common people directly. This has been affecting the economy of Sweden on a large scale and banks are struggling with high loan losses.

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