reaching agreements in other areas of the labour market. i am also thinking of certain changes to the legislation and the establishment of the national mediation office. another factor should be that resource utilisation has been kept at a lower level than previously, a level that is compatible with low and stable inflation. the increased credibility of monetary policy in terms of keeping inflation close to the inflation target of 2 per cent has probably also contributed. inflation expectations over the longer term now lie close to the inflation target ( figure 24 ). low wage increases during the forecast period this year, social partners will negotiate just over 550 collective agreements covering just over 3. 3 million employees. the results of these negotiations will affect the wages of the majority of the country ’ s wage - earners, thereby being of great significance for economic development. the developments we see ahead of us, with a drawn - out recovery and weak labour market, make it difficult to imagine anything other than that there will be low wage increases in the period ahead. in december ’ s monetary policy update, we expect wages to increase by an average of approximately 2. 5 per cent per year during the period 2010 – 2012, this figure being slightly lower towards the start or the period and slightly higher towards the end ( figure 25 ). however, this should not be interpreted as a recommendation, but rather as a forecast based on developments in the economy and other available information. naturally, developments in this area may take a course deviating from our expectations, just as in other areas. wage increases include not just contractual wage increases but also wage increases over and above central wage agreements. wage development forecasts form a part of the overall forecast for the swedish economy. we base our wage forecasts on the short - term wage statistics of the national mediation office, with adjustments made to the preliminary statistics for estimated retroactive wage payments. following this, a forecast is made in two stages. the first stage covers the next six months, considering previously agreed wage increases, the situation on the labour market and inflation expectations. the second stage covers the next two to three years and considers unemployment, corporate profits and inflation expectations. as in other forecast areas, a final assessment of wage developments is made in consideration of model results and other information not included in the models. the financial crisis and wage formation the financial crisis has affected the swedish economy in two ways. firstly, the financial markets and the financial sector have been impacted negatively. however, in principle, this problem has now been addressed. central

service costs as a percent of the disposable income of homeowners last year were little changed from 2001. the estimated 10 percent of homeowners'disposable income allocated to mortgage debt service in the third quarter of last year was well below the highs in 1991, though the ratio of homeowners'mortgage debt to their disposable income rose to a record high. refinance and home purchase originations, seasonally adjusted, peaked in the fourth quarter of last year. it is difficult to imagine that pace being maintained in the current quarter. seasonally adjusted applications for refinancings, as reported by the mortgage bankers association, are off their peaks but still impressively high. so are home purchase mortgage applications. this suggests a somewhat less robust market for mortgage originations this quarter. with home price increases now subsiding, and mortgage interest rates no longer declining at last year's impressive pace, some slowdown in the rate of mortgage debt expansion is to be expected. that is likely to be the case for equity extraction from home turnover as well. as i noted earlier, that extraction appears to parallel the realized capital gains on home sales, which mainly reflect the number of existing home sales. home price change, of course, is also a factor, but it is the average change over the length of occupancy - nearly ten years for the typical homeowner - that matters, not recent price trends. similarly, refinancing and the cash - outs associated with them accelerated last year as the decline in mortgage interest rates on new loans far exceeded the modest decline in the average rate on all outstanding regular home mortgages. this wider spread between the current mortgage rate and the rate on outstanding loans, as you all know, markedly increased the incentive to refinance. so any stabilizing of rates on new mortgages would narrow the spread as portfolio rates continue to decline as a consequence of continued refinancing at interest rates still below the portfolio average. a narrowed spread would likely reduce cash - outs, lessening the level of equity extractions from this source. we do not have estimates of total home equity loans beyond the end of last year, but lines of credit at commercial banks - approximately a fourth of total home equity loans - rose during the first 7 weeks of 2003, considerably more than the typical seasonal change. in summary, the frenetic pace of home equity extraction last year is likely to appreciably