In light of concerns around household debt levels, Financial Markets Minister Per Bolund announced on Thursday that tougher amortisation requirements will be introduced for homeowners as of 1 March 2018. All new mortgage holders who borrow more than 4.5 times their gross income will have to amortise at least 1% of the debt, in addition to the existing requirement.
The new requirement will have the most impact in Stockholm and Gothenburg, where property prices are highest. In Stockholm, 30% of all new mortgage holders will be affected.
Elisabeth Svantesson, the Moderate spokesperson on economic policy, is critical, pointing out that house prices are already falling and that such a measure could lead to a further drop in prices. She calls for major reform of the housing market instead.
Andreas Hatzigeorgiou, chief economist at the Stockholm Chamber of Commerce, believes the new requirement will do more harm than good and curb growth in the region.
Housing Minister Peter Eriksson is doubtful about the new amortisation requirement and believes other alternatives ought to be considered.
On Monday the Financial Supervisory Authority (FSA) is expected to make a decision about whether to introduce new tougher amortisation requirements. The issue is a difficult decision for the government as giving the go-ahead could entail risks, but stopping the proposal would undermine the FSA.
On Wednesday Financial Markets Minister Per Bolund (Green) criticised the opposition, calling its stance against the proposal “irresponsible”. However, party colleague Peter Eriksson expressed his uncertainty. “I think the amortisation requirement that was brought in recently has had mainly a positive effect. In the situation we have now it is more uncertain. I think that other possible measures ought to be considered,” he says. His main concern is that it would slow down housing construction.
The government has decided to task the Financial Supervisory Authority (FSA) to map and analyse how the Swedish financial sector can contribute more effectively towards achieving the goal of sustainable development
The government has even said in recent talks with the sector that it would be prepared to legislate if there is need for such a step.
“In the case of the fund market, France has already introduced a law obliging financial institutions to report their carbon footprint. I hope the industry will see the need for this before we need to legislate,” says Per Bolund, financial markets minister.