Swedish policymakers believe the effects of rising interest rates on the commercial real estate sector is the biggest risk for banks but said a crash is unlikely.

Commercial property owners need to refinance 300B Swedish Crowns (~$29B) in the next two years.

Acting head of the Financial Supervisory Authority, Susanna Grufman, said during a parliament hearing that there had been an unsustainable build-up of risk in recent years and a correction is necessary.
Some real estate companies in the country have already started selling off parts of their portfolio to reduce debt.
Riksbank data show that real estate companies account for 44% of banks' commercial lending.
Credit losses for banks could amount to up to 45B Swedish Crowns (~$4.4B), mainly caused by unlisted commercial property companies.