Swedish consumers see that happy days are coming. According to the NIER household survey, the consumer confidence indicator (CCI) came in at 104.9, up from 102 in October. Households became more optimistic both on their own economy and the overall Swedish economy.
Partly on the back of strong stock market developments we had expected an improved sentiment. There are many, more general, reasons for consumers to be optimistic. Households’ overall fundamentals, such as net wealth and disposable income growth, look positive and the labour market is improving.
Notably , households expectations of mortgage rates turned down in November. Households now expect the flexible (3 months) mortgage rate on the five-year horizon to stand at 3.9 percent. The low mortgage rate expectations are something that has worried the Riksbank since too optimistic expectations may lead households to take out bigger mortgages than they would really like. When interest rates normalize, this could in turn have major implications for the real economy, for instance through declining house prices. We think they do.
Details for November:
Consumer Confidence indicator (CCI): 104.9 (Nordea 104; consensus 102; prev. 102)
Inflation expectations one year ahead: 1.4% (prior 1.5%
Nordea