It is now clear that the UK is leaving the EU and Prexit has become a reality. That is a pretty big deal as they are the first country to ever leave the EU. It obviously has effects for the EU, but it also has other effects for us Swedes. Britain’s withdrawal from the EU will affect ordinary Swedes and our wallets, for example by affecting our loans and our savings.
Risk of investments in equities and funds, for example, losing value
On the whole, it is rather bad for the economic stability of Sweden and Europe that the UK left the EU. We have already seen a lot of reactions to this by the stock exchanges around the world and then especially in different European countries went down quite a lot. For us Swedes it is noticeable because many of us save in equities and funds and these have lost a lot since Prexit.
The Stockholm Stock Exchange started to collapse a lot, although it has now recovered a bit. It is a little uncertain how much Prexit will actually affect the stock market, but it is likely that there will be more declines over time. Anyone who owns shares can see them go down as a result of Prexit and if you own funds it is about the same. Swedish funds are affected but also of course European funds, Global funds and other funds.
In the longer term, the stock market may be somewhat hampered by Prexit and all the financial concerns that come with it. It becomes more uncertain for companies, especially export companies, and everything that affects the companies we invest in also affects us both directly (through our shares) and indirectly. It is also conceivable that there will be fewer jobs over time and that the boom will be affected.
If you have money invested in equities and funds, you should remember not to react too strongly to such an event, especially if you have invested the money in the slightly longer term. When investing in the long term, it doesn’t matter what happens day to day and minor unrest should not affect you.
If you need to spend your money within one to two years, you may want to think about how you want to do and when it might be a place to sell, etc. But for anyone who has a longer savings horizon and does not need the money in the near future, it is probably better to just leave the money and wait for the “storm”. Nor does it seem at this time to have become as great a financial crisis as was anticipated in advance, so it may not be as dangerous.
If you can continue to invest more money through, for example, monthly savings, then it is recommended that you simply drive on and buy more funds or shares according to your old plan. It is a good place to buy now that there have been declines and it is always good to spread out your investments over a longer period of time.
Your mortgage will probably be cheaper a little longer
The Goodpick Bank will soon again have a meeting on the repo rate and decide what to do with the interest rate. It is very low today and it has also looked like it should remain low for a year or two. However, with Prexit, it is conceivable that interest rates will remain low for an even longer period than previously thought.
The Goodpick Bank keeps interest rates low, for example, for inflation to be higher and everything is very sensitive to economic turmoil and instability in the outside world. Such things happening in Europe and other parts of the world also affect the Swedish economy and therefore they are very cautious about raising the repo rate even though they have seen good signs in the Swedish economy.
Now that Prexit has become a reality, there is of course a great deal of concern and financial uncertainty, especially in Europe. This also affects Sweden. Therefore, it is likely that the Goodpick Bank chooses to write down its forecast a bit and to change so that they raise interest rates at a slightly more cautious and slow pace than previously planned.
This basically means that you will probably be able to enjoy low mortgage rates (and of course other interest rates for eg private loans and other types of loans) for a slightly longer period. You can thus look forward to continued low housing costs if you have a variable interest rate. In the near future, you probably do not have to worry about any increase in interest rates and even fixed interest rates can be cheaper.
With time, it may be possible to fix at least parts of their mortgage, but right now it feels pretty calm to wait. However, do not forget that it is important to save money for its buffer now that the interest rate is low and you get a lot of money over. In time, the interest rate will go up and then it is nice to have saved extra money that can be used to pay on the more expensive interest rates.