• Sweden edition
 
'Tighten mortgage rules': housing agency

'Tighten mortgage rules': housing agency

Published: 28 Feb 2013 07:58 GMT+01:00
Updated: 28 Feb 2013 07:58 GMT+01:00

Rising mortgage lending is outpacing the increase in property prices in Sweden, leading a key state oversight board to raise a warning flag.

The Swedish National Board of Housing, Building and Planning (Boverket), which advises the government and parliament on policy, has now signalled that it recommends stricter lending rules.

All mortgage-holders should have a paydown plan in place, its analysts said on Wednesday.

Lending to Swedish households increased by 4.5 percent in January, the same rate that was recorded in December, according to figures from Statistics Sweden (Statistiska centralbyrån, SCB).

The continued upswing is moving at a faster rate than house price developments, which makes the situation untenable, according to market analyst Alexandra Leonhard.

"It's a bit worrying. Looking at the bigger picture we see that Swedes are borrowing more and more, with debts proportionately higher to the property price," she told the TT news agency.

Leonhard would like mortgage payments to be obligatory and would like a tighter framework for paying off the debt.

"We want to cut mortgage periods. It's not OK to have a loan that it would take 100 years to pay off," she said.

Swedes borrowed 2,771 billion kronor ($230 billion) in January, a 116-billion-kronor increase from the same period last year.

TT/The Local/at

Follow The Local on Twitter

The Local (news@thelocal.se)

Don't miss...X
Left Right

Your comments about this article

11:33 February 28, 2013 by djmarko
salaries are not high in Sweden, Taxes are indeed high, how is one supposed to have good savings? making lending stricter is going to add more issues than solve anything, as it is today, one needs to raise 15% deposit, apartment prices in central stockholm are quite high, at an average of 2Million for example, one will need to cough up 300,000, not everyone has this type of money unless they have well to do parents, then there is a job factor as earlier mentioned, soon parts of Stockholm will be like inner London, out of reach, even all the new production buildings in Stockholm are quite pricey and the monthly fees are so high, just get the feeling a social class will emerge, the haves, living in the choice parts of the city and the have nots, living in the suburb, guess this is already the case
13:31 February 28, 2013 by Mib
djmarko....the fact that people can borrow too much is pushing up prices above their natural levels....therefore, controls have to be put in to take he heat out of the situation. If the property market crashes...not just fall.....then everyone will be affecte to some degree. A crash will mean banks really tighten their lending rules and discriminate against higher risk applications.

The main reason I would say about the high price for the entry level apartments in Stockholm is mainly due to the lack of rental properties....solve that issue and you'll reduce supply and demand for buing and hey presto prices will not be driven so high. I heard that only 170 new properties were built in Stockholm last year and there is a 18 year waiting list for opular places in central Stockholm....so no surprise that prices for the 1 to 2 room apartments are increasing.Maybe the recent relaxation of the rental rules will help.

Before the deregulation of the financial markets, getting a mortgage was tougher with higher interest rates, but then property prices were much lower as a result. So in essence you can't have it both ways. Either you make he rules tougher to decrease demand which will reduce stupid price rises or you let it continue as it is until something breaks and then we'll be all forced for even tougher lending rules.

One thing that our parents and grandparents had was this attitude thay we DO NOT have a right to own a car, own a property, own a smartphone, have 2 holidays a year etc etc. They sacrificed and saved very hard to get the deposit they needed to saitify the lending rules at the time. Now it seems that everyone has right to own a home...well sorry...NO. If you work hard, study, makethe right decisions then you normally get back what you put in. If you don't then I'm sorry, you either do something about your situation or continue as you are. Nobody owes you anything.
13:46 February 28, 2013 by Abe L
Reducing taxes and providing households with more disposable income to actually have a payment plan for a loan is the only thing that will ever solve this problem.

Fully agree with #1 that the 15% rule has to go, people need to be able to get a 100% loan at least on their first mortgage in order to get started in the housing ecosystem. The only thing that should matter is the buyers financial solvency.
14:53 February 28, 2013 by riose
@Abe L Increasing disposable income will increase the debts. After all, they have more money to pay them off.

Making loans more expensive will reduce debts, as people will not take them.

The way to solve this problem is to let the bubble burst.
14:57 February 28, 2013 by grandmary
How racist to say we should reduce taxes. Who will pay for my SFI. If I don't have SFI what am I supposed to do all day. I will be bored. Germany won't let us in France won't let us in. We rely on Sweden. Where are all the Syrians supposed to go? They can't stay there. Oh Eric Ullenhag, where are you when we need you?
19:28 February 28, 2013 by djmarko
@MIB i was talking more in general, was not reflecting on my situation, i have just sold and bought another apattment and yes i worked my ass off to get that 15% but like i said maybe having a good job helped as well but this is not the case for everyone, i do agree with you that household debt has to be reduced but the tax system eats away whatever you have left, itsl like a double taxation thing going on in Sweden
19:24 March 2, 2013 by oddsock
"One thing that our parents and grandparents had was this attitude thay we DO NOT have a right to own a car, own a property,"

B.S.

The situation is the exact opposite that you describe.

My parents worked normal jobs with a normal salaries and with this they could expect to pay off a mortgage within 20-30 years and fully own their house.

Nowadays house prices are so high that people my age are signing off on 100 year mortgages, meaning that people will never own their own house and spend the rest of their life in debt.

The baby boomer generation, have made an absolute killing on the property market and are living plush retirments, while the current generation have to purchase houses in the overvalued markets these people left behind, essentially financing the retirement of the baby boomers.

I have been working full time for 10 years, have no iPhone, most years I don't go on holiday, and I have saved every penny I made. Yet I still can't purchase a house without signing mysefl into ridiculous amounts of debt.

The only way for this to be solved is for the house prices to come down. But there are too many vested baby boomer interests working in the financial world, and due to demographics they are the largest segment of the population.
08:09 March 5, 2013 by djmarko
In London for example, for a typical 1 or 2 bed apartment, on average, you are looking at over 200K, this is for outer London, Central London is way out of reach for most, even on a good salary of 50K yearly, how many years will it take to save up the 15%- 30K, the house prices have gone way out of reach, same applies to central stockholm where most people want to live, it wil take people over 10 years to save up because salaries here are not the high, so unless you have rich parents or a highly paid job, not sure how this is going to work
Today's headlines
Ikea to introduce 'green' vegetarian meatballs

Ikea to introduce 'green' vegetarian meatballs

Swedish furniture giant Ikea are planning to put vegetarian meatballs on the menu in an attempt to cut down on its carbon footprint, the company has announced. READ () »

Students to keep paying off debt beyond 67

Students to keep paying off debt beyond 67

The Swedish government has proposed scrapping the 25-year span for repaying student loans, by suggesting those who attend higher education should keep paying the money back well into retirement. READ () »

Drowned puppies found in crayfish cage
The crayfish cage in the picture is not the one mentioned in the story. Photo: Christine Olsson/TT

Drowned puppies found in crayfish cage

Police in eastern Sweden have launched a preliminary investigation of animal cruelty after two puppies were found drowned in a crayfish cage. READ () »

Three rescued after cruise ship sinks boat
Rickard Rundgren Björk of the coastguard services speaks to the media after the rescue operation on April 19th 2014. Photo: Maja Suslin /TT

Three rescued after cruise ship sinks boat

Three Saturday morning sailors had a lucky escape after their small boat collided and sank after it crashed into a cruise ship whilst sailing in the Stockholm archipelago. READ () »

Missing Swede found alive and well in UK
Sofie Marie Jansson. Photo: Metropolitan Police

Missing Swede found alive and well in UK

British police have found the missing Swedish girl Sofie Jansson in London, exactly a week after she was last seen, with authorities saying she is doing well. READ () »

Social Democrats make tax pledge to elderly

Social Democrats make tax pledge to elderly

Sweden's opposition party has stepped up its efforts to secure the pensioner vote by pledging to lower taxes for the elderly and make higher earners pay more. READ () »

Malmö Nazi attack victim on the mend
Showan Shattak pictured in Malmö before his attack. Photo: Facebook

Malmö Nazi attack victim on the mend

The 25-year-old man, whose stabbing by neo-Nazis sparked mass demonstrations across Sweden, has made a strong recovery in hospital and took to social media to thank supporters for campaigning against fascism. READ () »

Police seeking missing Swede in London

British police have issued a plea for tips in the search to find Swedish national Sofie Marie Jansson who hasn't been seen for almost a week. READ () »

University applications rocket to record high

University applications rocket to record high

Swedish universities continue to draw vast amounts of applicants with the number of prospective students seeking a third level education increasing for the seventh year in a row. READ () »

Man jailed in US over Lars Vilks murder plot
Swedish artist Lars Vilks pictured in New York in 2012. Photo: Linus Sundahl-Djerf/TT

Man jailed in US over Lars Vilks murder plot

American authorities have sentenced a 20-year-old accomplice of 'Jihad Jane' to five years in prison for an attempted terror plot to kill Swedish artist Lars Vilks, after getting involved with the murder plans when he was a teenager. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
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
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
Advertisement:
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
TT
Politics
Swedes to give six-hour workday a go
TT
Society
Aussie choir member wows Abba in Sweden
YouTube
Society
Stockholm magic a surprise YouTube hit
Fastighetsbyrån
Society
Gallery: The Local's Property of the Week
Private
Society
Swedes find 200-year-old gravestone in living room
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
Deepti Vashisht
Features
Deepti Vashisht dissects the magic of Sweden's personal ID number
Shutterstock
Society
Ten signs you've been in Sweden too long
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 »

740
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