• 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

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.

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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,"


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
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