Interest rate sensitivity — can your finances handle the next rate hike?

Between 2022 and 2023, the Riksbank (Sweden’s central bank) raised the policy rate from 0% to 4%. Mortgage rates followed. For a mortgage of SEK 3 million with a variable rate, the interest cost increased by around SEK 7,500 per month, before the tax deduction (ranteavdrag).

That was not a hypothetical scenario. It happened. And most people had not calculated for it.

The rule of thumb to keep in mind

Each percentage point of interest costs roughly SEK 830 per million per month, before the tax reduction for interest (ranteavdrag). After the tax reduction it becomes SEK 580 per million where the tax reduction is 30% and SEK 660 where it is 21%.

According to the Swedish Tax Agency (Skatteverket), the tax reduction is 30% on the part of a capital deficit that is up to SEK 100,000 per person per year and 21% on the part above. The table shows a mortgage of SEK 3 million. In the example two borrowers share the loan and the interest equally, have no other items in the capital income category and pay enough tax to use the whole tax reduction.

Interest rate	Interest cost/month	After the tax reduction	Difference vs 3%
3%	SEK 7,500	SEK 5,250	—
5%	SEK 12,500	SEK 8,750	+SEK 3,500
7%	SEK 17,500	SEK 12,325	+SEK 7,075

From 3% to 7% is SEK 7,075 more per month after the tax reduction. That is the equivalent of a part-time job in extra housing costs. During 2022–2023 the interest cost increased by roughly the same amount — around SEK 7,500 per month before the tax reduction.

At 3% and 5% the annual interest is SEK 45,000 and SEK 75,000 per person, and the whole amount gives 30%. At 7% it is SEK 105,000 per person, and the last SEK 5,000 gives 21%. For a single borrower SEK 100,000 is passed when the interest rate is above 3⅓%, and the interest cost after the tax reduction is SEK 5,250 at 3%, SEK 9,125 at 5% and SEK 13,075 at 7%.

Approximately 75% of Swedish mortgage holders have variable rates, which means every rate change takes effect within three months. A fixed rate is insurance. Like all insurance it costs money — a premium today to avoid unpleasant surprises tomorrow. There is no objectively right choice. It depends on your buffer and how well you sleep at night.

Run your own stress test

The bank tests you at a 6–7% stress interest rate (kalkylranta) in the affordability assessment (KALP — kvar att leva pa). But their test is based on standardised estimates, not your actual budget.

Take your current budget: actual expenses, not estimates. Add the interest cost if rates rise by 2 percentage points. Is there money left, with a margin for the unexpected? And then: can you handle plus 3 percentage points? If not, you should consider whether the property is in the right price range, or whether part of the loan should be fixed.

There are also three ways to reduce sensitivity directly. A cheaper property reduces the loan and the sensitivity right away. Every million less in borrowing saves SEK 580 per percentage point per month where the tax reduction is 30%, and SEK 660 where it is 21%. A larger down payment (kontantinsats) has the same effect. And fixing part of the loan — a common setup is 50% variable and 50% fixed — provides a buffer without giving up all flexibility.

If you want to negotiate your mortgage rate down, that is one of the fastest ways to reduce your total sensitivity — one phone call can save tens of thousands of kronor.

Frequently asked questions

How do I calculate my interest rate sensitivity?

Take your loan amount, multiply by the rate difference (e.g. 2 percentage points), divide by 12 and subtract the tax reduction for interest (ränteavdrag). According to the Swedish Tax Agency (Skatteverket), the tax reduction is 30% on the part of a capital deficit that is up to SEK 100,000 per person per year and 21% on the part above. With a SEK 3 million loan, each percentage point increase costs roughly SEK 1,750/month after the tax reduction where 30% applies and roughly SEK 1,975/month where 21% applies. The amounts assume that you have no other items in the capital income category and pay enough tax to use the whole tax reduction.

What happens if the interest rate rises to 5%?

With a SEK 3 million mortgage and a rate increase from 2.65% to 5%, the cost after the tax reduction rises by roughly SEK 4,100/month for two borrowers who share the loan and the interest equally. The annual interest per person is then below SEK 100,000, and on that part of a capital deficit the tax reduction is 30% according to the Swedish Tax Agency (Skatteverket). On the part above SEK 100,000 it is 21%, and for a single borrower the increase is roughly SEK 4,500/month. The amounts assume that the borrowers have no other items in the capital income category and pay enough tax to use the whole tax reduction. That is the kind of scenario banks stress-test in their affordability assessment (KALP).

Run an interest rate sensitivity analysis and see exactly how your monthly cost changes at different rate levels. In BoKalk you can quickly see whether your finances can handle a rise — and how much buffer you actually have.

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The tax reduction rule was checked on 2026-10-09 against the Swedish Tax Agency’s page Avdrag för ränteutgifter (in Swedish). The worked examples are our own calculations using the stated assumptions.

Christoffer, founder BoKalk