Hypoteket shuts down first mortgage fund

Hypoteket, a newcomer in the Swedish mortgage market, issued its first mortgage in Sweden in March 2018 and has since lent over 26 billion Swedish kronor to Swedish borrowers.

Unlike traditional banks and mortgage institutions, Hypoteket finances itself through so-called mortgage funds. These are essentially alternative investment funds where mortgage loans are placed as assets in the fund. Mortgage loans, in turn, are attractive investments for pension funds and others because mortgages are inherently secure and historically have provided a reasonable return with moderate risk, especially when loan-to-value ratios (the amount of the loan compared to the value of the property) are low and credit lending is sound.

After a little over five active years, Hypoteket is now closing its first fund, Mortgage Fund 1, through an early redemption initiated by the fund manager. Dag Wardaeus, co-founder of Hypoteket and responsible fund manager, summarizes: "We had an opportunity to refinance and close the fund early and took the opportunity to repay the investors who have been with us since day one. I can state that the fund has done what we and our investors hoped it would do, namely deliver a stable return with low risk regardless of what has been happening in the financial markets otherwise. Since the fund was launched we have experienced a pandemic, large-scale war in Europe, soaring inflation and record-fast interest rate hikes, but Swedish mortgages have once again shown good resistance to surrounding turbulence. The fund has not had a single credit loss during its lifetime, and interest payments have performed as expected."

The closure of the fund will go un-noticed by our borrowers as remaining mortgage loans are transferred to our other funds. For interested investors, there are still opportunities to invest in either of the open funds, Mortgage Fund 2 or Hypoteket Mortgages 3.