‘Tighten mortgage rules’: housing agency

'Tighten mortgage rules': housing agency
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

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