Sweden's mortgage system, where borrowers amortize a fixed amount monthly and pay interest on top of the remaining debt, has long favored Swedish homeowners.
Until 2016, you could borrow without amortizing, which was a very generous loan. At the same time, it was advantageous to have a variable interest rate since it was so low. It wasn't until the amortization requirement emerged that it started to become expensive, says Lind.
Locked out
When interest rates began to rise sharply in the spring of 2022, the costs became even more palpable since a large proportion of Swedish mortgage holders had a variable interest rate.
If you don't want so many to have a variable interest rate, you must also make it advantageous to choose a fixed interest rate. Today, you are forced to pay tens of thousands of kronor to the bank to break a tied loan prematurely.
According to Lind, other countries such as Denmark, Norway, Germany, and even the USA have mortgage systems that protect homeowners from high expenses initially and interest rate changes. In some countries, borrowers have the opportunity to take out 30-year annuity loans, where the amount paid is the same every month. Several countries have also had special support for first-time buyers.
This enables homeownership for people with lower incomes. In Sweden, there is a lack of political will. The underlying problem is that we have high expenses directly after a home purchase, he says, and emphasizes that the tough requirement has locked out certain groups from the housing market.
Biased in favor of banks
If we're going to be honest, Sweden has only lent to households with good economies, but it should be self-evident that households with normal incomes can buy a row house in a suburb without having parents with millions in their account.
But change may be on the way, according to Lind.
The interest rate compensation is being changed, thank goodness, because it has been extremely biased in favor of banks. It also looks like the amortization requirement may be changed. I believe that's necessary if we're going to get a more just system.
