Lower mortgage rates or higher interest rates?
The Swedish Social Democrats has proposed a temporary bank tax that it says would lead to lower mortgage rates, while Moderaterna argues that banks would compensate by raising mortgage rates. Roine Vestman, Professor of Economics at Stockholm University, is interviewed by Svenska Dagbladet and points to three possible effects of the proposal.
Roine Vestman, Professor of Economics at Stockholm University.
The Social Democrats want to introduce a temporary tax on banks’ excess profits. According to the party’s website, the tax would apply only to the portion of banks’ net interest income that exceeds the historical average, giving banks an incentive to keep interest rates low for their customers.
The Social Democrats also want to strengthen competition between banks by using the state-owned bank SBAB to put downward pressure on interest rates. They also propose banning hidden list rates to make it easier for customers to compare banks and switch providers.
Moderaterna and Prime Minister Ulf Kristersson are not the only ones sceptical of the proposal; the major banks have also voiced criticism, Svenska Dagbladet reports.
Roine Vestman tells Svenska Dagbladet that what constitutes a reasonable net interest margin for a bank depends in part on the risk associated with its lending. Lending to high-risk customers or businesses justifies a higher interest margin. He points to three possible effects of the proposed tax:
“Three likely effects: it will generate some tax revenue, some of the cost will be passed on to borrowers, and it will favour less risky lending over riskier lending.”
Further reading
Read the full article in Svenska Dagbladet (in Swedish)
Roine Vestman is Professor of Economics at Stockholm University, Director of CeMoF, a Research Fellow at CEPR, and a Visiting Researcher at the Swedish House of Finance.
Read more about his research here:
Last updated: 2026-08-24
Source: Department of Economics