• 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

The head of Sweden's central bank, Stefan Ingves, said on Tuesday that the government could be forced to make Swedes pay off their mortgages if the country's banks don't "take the responsibility" themselves.

"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)

Don't miss...X
Left Right

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
Florida 'mystery knight' dies in Sweden
Michael Boatwright (R) and Medieval knight re-enactors.

Florida 'mystery knight' dies in Sweden

The "motel mystery" American who baffled US authorities by only speaking Swedish when he woke up from a coma last year has passed away, Swedish media reported on Wednesday. READ () »

Swedes open coffin of 850-year-old king
Photo: Bertil Ericson/TT

Swedes open coffin of 850-year-old king

UPDATED: Scientists pried open the 850-year-old casket of King Erik the Holy on Wednesday, hoping to find out more about the king, his crown, and his eating habits. READ () »

TeliaSonera announces first-quarter profit drop
TeliaSonera CEO Johan Dennelind. File photo: TT

TeliaSonera announces first-quarter profit drop

Stockholm-listed telecom operator TeliaSonera on Wednesday said profits had fallen in the first quarter, but hoped offering customers more data solutions in the future would turn things around. READ () »

'Imperfect EU better than revolting nationalism'
Fredrik Reinfeldt. File photo: TT

'Imperfect EU better than revolting nationalism'

Swedish Prime Minister Fredrik Reinfeldt on Wednesday urged young voters to head to the European parliamentary polls on May 25th "to cure the European disease of nationalism". READ () »

Ericsson quarterly profit defies sluggish sales
Ericsson CEO Hans Vestberg at the first quarter press conference. Photo: TT

Ericsson quarterly profit defies sluggish sales

Swedish telecom giant Ericsson on Wednesday announced a drop in sales but posted a sharp rise in first-quarter profit, which nonetheless fell shy of analyst predictions. READ () »

Fatal Norrköping brawl
Four brothers held as cops fear brawl reprisals
Photo: Johan Nilsson/TT

Four brothers held as cops fear brawl reprisals

Swedish police fear that several people involved in a brawl in eastern Sweden on Monday night may be seeking revenge after two brothers were shot dead. READ () »

Sponsored Article
Beautiful pearls of southeast Sweden
The town of Västervik.

Beautiful pearls of southeast Sweden

Ask a Swede, and they are likely to say that their favourite holiday spot is in the southeast of Sweden. Eastern Småland and Öland offer a smörgåsbord of all the things dearest to the Swedes - from the beloved children's book author Astrid Lindgren to deep forests, long sandy beaches, perfect spots for that all-important 'fika', and a surprising amount of space, peace and quiet. READ () »

Weekend weather to bring summer warmth
Swedes enjoy hot dogs and cherry blossoms in Stockholm's Kungsträdgården. Photo: Jessica Gow/TT

Weekend weather to bring summer warmth

The sun is set to stick around and temperatures could climb into the twenties over the weekend, Swedish meteorologists said on Wednesday READ () »

'Day-care rapist' admits molesting eight kids

'Day-care rapist' admits molesting eight kids

A 21-year-old man confessed on Wednesday to sex crimes against eight children at a day care where he was working as an intern. READ () »

Swedish cops nab man for having big muscles
An unrelated bodybuilder. File photo: Ann Törnkvist

Swedish cops nab man for having big muscles

Police in Sweden's south who hauled a muscular man in for steroid testing have had their knuckles rapped, after it was ruled that big biceps cannot be grounds for narcotics suspicions. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
TT
Gallery
Inside the 850-year-old king's coffin
Features
Sponsored: South-eastern Sweden offers Öland beaches and more
Gallery
Swedish underwear shop puts staff in front of the camera
Gallery
IN PICTURES: The Local's Property of the Week - Täby
Sponsored: India+Sweden Week - India Unlimited
Features
Sponsored: India+Sweden Week - A film, food, and finance feast
National
University applications rocket to record high
finest.se
Gallery
People-watching April 18-20
TT
Society
Kids in Victorian garb mark Swedish Easter
Shutterstock
National
Swedish MP ordered chemtrail probe
Society
Swedish supermarket Ica pulls contested Easter commercial off air
Kungahuset
Society
Swedish royals set baptism date for princess
finest.se
Gallery
People-watching April 16
Advertisement:
Politics
Who's the prime minister's heir?
Alfie Atkins
Society
Are children's books the key to families integrating in Sweden?
National
'Sweden Dem protests cater to party's martyr image'
National
'Swedish research grants were fantastic, but now it's like Australia'
Society
Only in Sweden: The ten problems you'd never encounter elsewhere
National
Swedes stopped to take my picture, but didn't look me in the eyes
Business & Money
A swipe of the hand replaced cash and cards in Lund
YouTube
Features
Video: Oliver Gee finds out how to embrace The Swedish Hug
TT
National
Abba duo hints at reunion
Private
National
Flash mobs hug it out across Sweden
Finest.se
Gallery
People-watching April 11-13
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
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 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

Blog Update: The Diplomatic Dispatch

28 October 15:16

The Green Growth Group Summit »

"Today on the 28 October in Brussels, a large group of key EU Ministers and business people, including UK Secretary of State for Energy and Climate Change Edward Davey, and Swedish Environment Minister Lena Ek, will meet to discuss green growth. They all have a stake in resolving a challenge which, although it is crucial..." READ »

712
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