The so-called macroprudential tools – amortization requirements, mortgage ceilings, and banks' credit assessments – have, according to the Swedish Central Bank's stability report, made Swedish households better equipped.
It has strengthened resilience, says Riksbank Governor Erik Thedéen at a press conference.
Critical of the investigators' approach
It is primarily the investigators' proposal to significantly raise the debt-to-income ratio ceiling – from 450 percent to 550 percent of households' gross income – that worries Thedéen. However, he is also critical of the entire approach of the investigators, that the solution to get more people onto the housing market would be to soften the regulations for mortgages.
I think that's unfortunate.
Financial Markets Minister Niklas Wykman (M) has announced a proposal for new mortgage regulations in the spring.
We will never risk financial stability in Sweden. That's not the same as saying you can't make any changes, he says after the Swedish Central Bank's criticism.
Thedéen reminds us that the inflation and interest rate shocks of 2022–2023 were not "the crisis of crises" and that large parts of the economy have managed quite well.
And the fact that we have managed quite well can actually be due to the fact that we had sound credit assessments, that we had amortization requirements, and that we had ceilings that maintained order in the system.
He adds that he simultaneously welcomes the review and reform of the mortgage system. However, according to Thedéen, the barriers to the Swedish housing market – with prices that many cannot afford – are not created by the regulations surrounding mortgages, but by housing policy decisions.
The major measures to increase opportunities for young people and others to enter the housing market can hardly lie in changing the loan market. Other structural measures are needed, he says.
Uncertainty has increased
In the stability report, the Swedish Central Bank notes that financial risks have decreased in the short term, but uncertainty in the surrounding world has increased.
Among the stability risks right now, Thedéen particularly points to how increased geopolitical tensions have increased the risk of cyber attacks.
Lower interest rates have created a more favorable financing situation for the partially crisis-stricken property sector. But it's not possible to downplay the danger there, according to the Swedish Central Bank, which describes indebted commercial property companies as a "structural risk".
