• Sweden edition
 
Riksbank probes mortgage-repayment law

Riksbank probes mortgage-repayment law

Published: 15 Jan 2013 12:54 GMT+01:00
Updated: 15 Jan 2013 12:54 GMT+01:00

"There should be some kind of regulatory requirement on repaying housing loans," Ingves told the Dagens Nyheter newspaper (DN).

"It creates huge risks if the loans have an eternal life."

At present, it is relatively common for Swedes only to focus on their monthly interest rate payments rather than attempting also to pay down the principal on their mortgages.

"In most other countries, people pay down their mortgages to varying degrees. We're heading into a different world where we start to look like the odd one out and that increases the risks," Ingves told the TT news agency.

The best solution, according to the Riksbank head, would be if the banks could sort out the current system's shortcoming themselves "without being forced by others".

Sweden's Financial Inspectorate (Finansinspektionen, FI) is currently investigating how the system has been working so far.

"I think mandatory rules should be introduced if sufficient action is not taken [by the banks]. You can't just expect someone else to do everything," Ingves said.

"If the banks don't take the responsibility, then it will be up to the government," he said.

A spokeswoman from the SEB bank, Anna Helsén, said the bank agrees that the issue is important, but that steps are already being taken to tackle the problem.

"This is something the banks can decide, there's no need for legislation," she told TT.

"We have introduced a requirement for the home-owner to repay anything that exceeds 70 percent of the property's value. Mortgage payments are good for the customers themselves."

TT/The Local/og

Follow The Local on Twitter

The Local (news@thelocal.se)

Your comments about this article

14:25 January 15, 2013 by Mib
As long as the rules aren't stringent, then I welcome a policy where a mortgage holder has to show that they are making regular savings or offer a minimum repayment that they have to make each month to reduce the capital debt. At the moment, it is the perfect time to reduce the debt while interest rates are low.
14:54 January 15, 2013 by icedearth
Can someone please explain?

As far as I know, in any part of the world, when you pay off your mortgage part of your contribution goes towards the interest and the house ( usually the contribution is higher towards the interest).

Do the people in Sweden have a choice to leverage their contribution between the two? If so, I think they are smart to pay off the interest. No?
15:23 January 15, 2013 by Kevin Harris
Why can't the bank and I reach any loan agreement we choose? I'm a fully grown man, and the bank is an institution quite able to tale care of itself. What's it got to do with the government how I, or my bank, care to organise our financial affairs?
15:25 January 15, 2013 by djmarko
Interest only payments are quite popular in Sweden, people usually choose this option with the hope that their property will rise in value and once they sell, they can always make a good profit and re-invest in another property, probably more expensive, i recently sold my apartment , i tied one part interest and the 2nd part capital, i reduced the mortgage within 4 years, seems thats the way forward
15:57 January 15, 2013 by icedearth
Thanks Djmarko.

guys, what do you think of JAK BANK?
16:58 January 15, 2013 by Mib
@Kevin Harris......I agree to a certain degree. But, the Government seems to be very concerned about the level of mortgage debt and how the banks would be able to cope if there is a property crash. It'll end up being much more expensive for everyone if the Government is forced to intervene like those in the UK combined with a lack of lending, which inevitably follows causing even more misery.

As we've seen in Ireland, UK, Greece, Spain etc, greed combined with fraud led to the collapse of their banks leading to bail outs and austerity measures. However, IMHO... Sweden is in a stronger position to deal with these situations as the aftermath of 2008 has proven.
19:25 January 15, 2013 by AmericaninSE
When I bought my apartment in Sweden I was shocked that I was only required to pay just the interest each month. The guy with the bank gave me a funny look when I told him that I also wanted to pay down the principal so he had to redo the papers to include the amount I wanted to pay.
20:39 January 15, 2013 by Freelife
1. It is very hard to find rental apartments in Stockholm. Hence it is good to pay just the interest and live in an apartment. This suits well for the people with less income.

2. There is no law that prevents one from amortization. If one wishes to pay that they can do it.

3. The govt. should think serious to improve the housing situation. People need rental apartments. If the rental apartments are plenty, then people with less income can live rentals where as richer ones can buy with suitable amortization. This is the situation in many countries.
23:28 January 15, 2013 by pkpekka
In Finland you are not able to take 50 or 70-year loans. On the other hand, Sweden has a more stricter minimum requirement (only able to have a loan for 80% of the apartment?). But the minimum collateral requirement only applies to those buying their first apartment. Further down the line it has no effect and so debt levels in Sweden are about 50% higher as in Finland. Though Denmark and Netherlands are even worse, also because of interest-free loans and also tax deductions on debt. I have a loan in Finland (living in Stockholm) and it is for 20 years. In Sweden the maximum down payment time should be maybe 35 years, this would prevent further rises in housing prices. It is the most effective method to curb rising house prices.
12:28 January 16, 2013 by expatdave
You can't just expect someone else to do everything," Ingves said.

Nice comment, we can however expect the government to pull their heads out of the sand and fix the current housing mess. It's all well and good to force people to repay debt but this will effectively suck money out of the economy by reducing consumer spending as people will be repaying debt rather than buying those new jeans and secondly the people looking to buy their first home, well, you'll just need to keep saving for a few more years until you can afford the higher repayments. One can expect the banks are wise enough to take care of their own risk.
16:44 January 17, 2013 by rob582
Sort out the housing shortage first before you mess with my mortgage.
11:27 January 20, 2013 by matonbass
Sorry folks, but until you pay for something you don't own it nor do you have any rights as to how the owner of the asset that you are renting ( the Bank) decides that he wants you to repay your debt. if you want to buy a house or flat , save up your money and pay for it in cash. stop pretending you are a rich man. the banks can do what they like with your mortgage. you own nothing until the Capital is paid off. soon 50% deposit will be required by the Banks before they lend money for housing loans. ( i think that's how it should be ) what right have you to think you should have a house when you're only a poor person needing a loan ?
Today's headlines
National
King Carl XVI Gustaf opens parliament
King Carl XVI Gustaf arriving on Tuesday afternoon. Photo: TT

King Carl XVI Gustaf opens parliament

BREAKING: Sweden's post-election parliament is meeting for the first time following a fanfare opening from King Carl XVI Gustaf. READ  

Opinion
Should Sweden's school age be raised?
A high school in Stockholm. Photo: TT

Should Sweden's school age be raised?

After the new coalition announced plans to extend Sweden's compulsory schooling until the age of 18, The Local asked two Swedes at high school if they agreed with the idea. READ  

International
Sweden slammed for ecological footprint
Sweden should increase its renewable energy according to WWF. Photo:TT

Sweden slammed for ecological footprint

Sweden is among the world's top ten polluters according to one of the largest scientific studies looking at the impact of humans on earth, produced by the WWF. READ  

Society
Swede's necklace found after 52 years in lake
Ing-Marie Olofsson whose necklace was found. Photo: Private

Swede's necklace found after 52 years in lake

A 66-year-old Swedish woman got the surprise of her life when a fisherman returned the necklace she dropped in a lake at the age of 14. READ  

International
Apology for Swedish model's stolen photos
Malin Sahlén during a Top Model shoot. Photo: TV3/Nina Holma

Apology for Swedish model's stolen photos

A British newspaper has apologised after a freelance journalist stole a Sweden's Next Top Model contestant's photo and created a fake Twitter account used to trick a UK minister. READ  

Brand stories
Johanna N: beautiful jewellery with a story

Johanna N: beautiful jewellery with a story

Aged just 27 and already living off of her own designs, some may consider Johanna Nilsson lucky. But she doesn't believe in luck. She's the founder of a jewellery line blending sustainability, subtle style, and Scandinavian simplicity - and it's taking the world by storm. READ  

Sport
Heel injury sidelines Zlatan in Barcelona clash
Photo: AP

Heel injury sidelines Zlatan in Barcelona clash

Paris Saint-Germain star Zlatan Ibrahimovic will miss Tuesday's Champions League clash with Barcelona at the Parc des Princes due to a nagging heel problem, the French club have confirmed. READ  

National
Stockholm patient tests negative after Ebola fears
The Infection Clinic at the Karolinska University Hospital in Huddinge. Photo: TT

Stockholm patient tests negative after Ebola fears

A patient in a Stockholm hospital who was suspected of having contracted the Ebola virus was given the all clear on Tuesday morning. READ  

Elections 2014
New coalition agrees on defence and migration
A Jas Gripen. Photo: TT

New coalition agrees on defence and migration

UPDATED: The Green Party has committed itself to expanding Sweden's defence force, while the Social Democrats have compromised on work permits for migrants. READ  

National
Fresh Ebola case investigated in Sweden
The patient is being treated at the Karolinska University Hospital. Photo: TT

Fresh Ebola case investigated in Sweden

Doctors in Stockholm are checking a patient suspected of having contracted the Ebola virus. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Fastighetsbyrån
Gallery
Property of the week: Botkyrka
Education
New government to make school compulsory to 18
Politics
Sweden Democrat wins Deputy Speaker spot
National
Swedish scientists sneak Bob Dylan lyrics into articles
Lifestyle
The five best Swedish songs of the month
Blog updates

28 September

Spoiled Doyle (Blogweiser) »

"What you gotta watch out for in Sweden is the good stuff. http://www.youtube.com/watch?v=Re_EzUe6xpI In Sweden, it’s the good things you have to watch out for. Video on @TheLocalSweden http://t.co/rAb8eGFdTD pic.twitter.com/w37YYwMXy1 — Joel Sherwood (@joeldsherwood) September 29, 2014 " READ »

 

26 September

 (The Local Sweden) »

"Hi readers, Autumn swept into Sweden at the start of this week with snow in the north of the country and flooding in the south. As well as a change in the weather, Sweden’s change in political direction became clearer, with Social Democrat leader Stefan Lofven formally announcing his party would work with the Greens as..." READ »

 
 
 
Gallery
People-watching: September 28th
National
When Italian style meets Swedish simplicity
Lifestyle
Review: Sweden's first alcohol-free nightclub
Gallery
In Pictures: The MS Estonia disaster
Lifestyle
Ten things expat women notice in Sweden
Politics
What's next on Sweden's political stage?
Gallery
Sweden's 2014 election: Most memorable moments
Society
What's on in Sweden
Gallery
People-watching: September 24th
Seaman Oliver Gee with his first lobster
Lifestyle
How to catch the first lobster of the year
Gallery
In Pictures: Fredrik Reinfeldt through the years.
Society
Plucked out of Canada for love and guitars
Politics
How Sweden Democrats went mainstream
Politics
Scandinavia and Scotland: closer links?
Sponsored Article
How to start a business in Stockholm
Society
Why is Stockholm's Södermalm so cool?
Politics
Sweden elections: Who's who?
Sponsored Article
Introducing… Insurance in Stockholm
Gallery
Princess Estelle through the years
Business & Money
Five golden rules for the Swedish job hunt
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

850
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN