Last fall, heavyweight economists presented an investigation on the government's initiative, suggesting a number of easing measures in amortization requirements for mortgage borrowers and a raised mortgage ceiling.
The idea was, among other things, to make it easier for young people to enter the housing market.
If you have rich parents, you're not affected that much, but if you have to make your own luck, you're more affected if it becomes harder to get in, says Finance Minister Niklas Wykman in an inquiry in the Riksdag on Tuesday.
Hasn't Put Its Foot Down
The government has not yet put its foot down on the issue. Right now, the Ministry of Finance is working on a supplement to the investigation, which Wykman expects to be sent out for consultation before the summer.
By fall or winter, he aims to present the government's proposal for new measures.
Both the Swedish Central Bank and the Financial Supervisory Authority have expressed concerns about the investigation's proposals.
According to Riksbank Governor Erik Thedéen, there is no indication that amortization requirements and mortgage ceilings have affected young people's ability to enter the housing market to any great extent.
Okay with Adjustments
It's good that they're reviewing this type of measure. But I'm skeptical that the measures, according to their own calculations, will lead to a relatively sharp increase in indebtedness, primarily in groups that already have high debts, he says.
I think that's reckless.
Thedéen is not entirely opposed to changing the rules.
For example, you could make smaller connections to amortization but still maintain the restrictions on lending against income, i.e., the debt-to-income ratio ceiling, so it can be adjusted, he says.
Niklas Wykman thinks it's important to maintain amortization requirements. He has previously signaled that the tightened amortization requirement introduced in 2018 could be abolished.
Loans must be repaid, that must be the attitude even on the housing market, he says.
The government's investigators propose raising the mortgage ceiling from 85 to 90 percent and an amortization requirement of 1 percent for mortgages exceeding 50 percent of the property's value.
Furthermore, a new debt-to-income ratio ceiling is proposed, which means that it should not be possible to borrow more than 5.5 times the annual gross income, with room for banks to make exceptions for 10 percent of the loans.
Today's mortgage ceiling was introduced in 2010 and means that households cannot borrow more than 85 percent of the property's value. It was complemented in 2016 by an amortization requirement, which means that households that borrow more than 50 percent of the property's value must amortize at least 1 percent of the original loan each year. Those who borrow more than 70 percent must amortize at least 2 percent.
The amortization requirement was tightened in 2018 with a rule stating that households with mortgages larger than 4.5 times gross income must amortize an additional 1 percent beyond the first amortization requirement.
Source: Financial Supervisory Authority
