Households face pressure from rising housing costs while banks thrive in Sweden

According to Elinor Odeberg, chief economist at the trade-union-affiliated think tank Arena Idé, households are facing pressure from rising housing costs, while banks are thriving. She highlights a significant imbalance in who bears the brunt of the cost crisis, noting that banks have profited considerably from current interest rate policies. Odeberg suggests regulating bank margins through legislation, using the state-owned bank SBAB to foster competition, and introducing taxes on bank profits to benefit ordinary households. She argues that if banks face difficulties, it ultimately falls on the state to bail them out, making a bank tax akin to an insurance premium.

In contrast, Fredrik Kopsch, chief economist at the market-liberal think tank Timbro, disputes the claims of excessive banking profits at the expense of mortgage customers. He states that banks operate within existing market conditions and political regulations and claims that no evidence shows that banks are making “extraordinary profits.” Kopsch emphasizes the importance of evaluating profits relative to the capital invested elsewhere and points out that mortgage margins have historically been lower during periods of high interest rates.

Annika Alexius, a professor of economics at Stockholm University, agrees that margins should be viewed historically. She notes that higher interest rates lead to significant public frustration over high mortgage rates coupled with low savings returns. However, she acknowledges the challenge in defining what constitutes “reasonable” banking profit, affirming that banks are profit-maximizers in a market economy.