A study proposes that the mortgage ceiling be raised to 90 percent and that the amortization requirement introduced in 2018 be abolished.
As a complement, the study proposes a debt-to-income ratio that limits the scope for how large loans a household can take.
Overall, Stefan Westerberg, private economist at Länsförsäkringar, believes that the proposals will increase accessibility on the housing market.
This applies particularly to young people.
Debt-to-income ratio ceiling
Today, a young adult needs a disposable income of 31,700 kronor to buy a one-bedroom apartment of 33 square meters in the Stockholm municipality. If the proposals become a reality, the same person will only need a disposable income of 27,900 kronor, according to a calculation made by Stefan Westerberg.
The calculation is based on a square meter price of 96,861 kronor, assuming that the person can borrow despite the debt-to-income ratio being higher than the ceiling.
The study also proposes that 10 percent of new loans can be granted outside the debt-to-income ratio ceiling, which could, for example, benefit individuals who are deemed to have good economic conditions to handle higher debt.
Risk of interest rate spiral
Ola Söderlind, household economist at Zmarta, also believes that the proposals will benefit individuals with good economies. However, according to him, there is a risk that the effect will be short-lived and that mortgage borrowers will get stuck in an interest rate spiral.
The debt-to-income ratio risks offsetting the proposed relief. This applies particularly to individuals with low to medium incomes who now risk finding it just as difficult to enter the housing market, he says, and continues:
It may also happen that the new proposals lead to increased demand and higher housing prices. Then, households will be forced to borrow more, and thus, interest expenses will increase. The real winners are the real estate agents and banks that benefit from us borrowing more.
