fastränta

Fastränta is the Swedish term for a fixed interest rate on a loan. In a fastränta arrangement, the interest rate is locked for a predetermined period, during which the borrower’s payments remain constant regardless of changes in market rates. Fixed-rate products are common for mortgages and certain consumer loans in Sweden.

How it works: At loan origination, the lender quotes a rate for the chosen fixed period, such as 1, 3, 5, or 10 years. The monthly payment is calculated to amortize the loan over its term at that rate. When the fixed period ends, the loan typically switches to a variable rate or the borrower may select another fixed-rate period, depending on the product and lender offerings.

Advantages and disadvantages: The main benefits are predictable payments, easier budgeting, and protection against rising interest rates during the fixed period. Disadvantages include the possibility of paying a higher rate upfront compared with a long-term variable loan, and the opportunity cost if market rates fall and the loan is not refinanced. Some contracts also include fees for early termination or refinancing within the fixed period.

Context and variations: In Sweden, fastränta offers a range of durations, and pricing depends on factors such as loan size, term, and borrower creditworthiness. Pricing is influenced by central-bank policy and market expectations. After the fixed period, borrowers can often renegotiate terms, switch to a variable rate, or take a new fixed-rate offer.

See also: rörlig ränta (variable rate).