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Western Europe: Pensions’ raid on mortgages heads north

Non-banks eye new funds to triple originations; interest margins at risk across Europe.

First it was the Netherlands, now Sweden. Like the Dutch, Swedish bankers have for years enjoyed a profitable and fairly oligopolistic banking sector, underpinned by high-margin and low-risk mortgages. But while challengers like Lansforsakringar and the Swedish arm of Danske Bank are gaining share, this year has also seen the entry of new online mortgage platforms using money sourced directly from local pension funds.

As the investors seem happy with initial results, the new entrants are preparing to scale up. A group of five Swedish pension funds is backing Hypoteket, which is advertised on the websites and newspapers of its Swedish media group backer, Schibsted. Similar investors are behind another recently launched mortgage fund, Stabelo, distributed by an established Swedish online savings and investments platform, Avanza.

Hypoteket’s co-founder and chief executive Carl Johan Nordquist says the investors have committed a local currency equivalent of around $250 million in aggregate to Stabelo and Hypoteket, allowing originations of about $25 million per month. He much expects larger commitments to follow soon, allowing the volume of monthly originations to triple in the autumn and winter.

This may still be small compared with the SKr3 trillion ($333 billion) mortgage market, but the new players envisage aggregate portfolios between the two of them and perhaps one other, in the hundreds of billion kronor.

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