In a report presented on Thursday, Sweden’s financial supervisory authority Finansinspektion (FI) said that new rules introduced in June last year, forcing new mortgage borrowers to pay down their loans, had helped make households more resilient, but the full effect would take years to realise (ed.). FI’s chief economist, Henrik Braconier, warned of an elevated risk that house prices could fall sharply, as could income, and of the likelihood of rising interest rates.
For the second time this year, an appeals court in Jönköping has challenged a proposal that would require households to pay off more than interest on their mortgages – a measure designed to counteract soaring house prices and the high level of household debt.
Earlier this year, the court ruled that the Swedish Financial Supervisory Authority (FSA) did not have the powers to set an amortisation requirement. In September, the government reached an agreement with the Left Party and the centre-right opposition to grant the FSA the necessary powers. But, in a statement released yesterday afternoon, the court ruled that any requirement to pay down mortgages should be regulated by law as such a move would have a significant impact on individual households’ finances. The court also stated that the change could be in breach of Sweden’s constitution.
Despite the court’s challenge, Minister for Financial Markets and Consumer Affairs, Per Bolund, has not given up, saying there is a legal basis for the proposal and that he is awaiting the comments of other bodies.