'Tighten mortgage rules': housing agency
Published: 28 Feb 13 07:58 CET | Print version
Online: http://www.thelocal.se/46454/20130228/
Rising mortgage lending is outpacing the increase in property prices in Sweden, leading a key state oversight board to raise a warning flag.
- Borg: housing market set for 20 years of stagnation (26 Feb 13)
- Swedes' high debts spark housing bubble fears (19 Feb 13)
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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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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.
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.
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.
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.