In April 2023, the government assigned economists John Hassler and Peter Englund, as well as the former director-general of the Financial Supervisory Authority, Martin Andersson, to review the mortgage ceiling and amortization requirements.
On Monday, the proposals will be presented, but already now, Minister for Financial Markets Niklas Wykman (M) says he is ready to review the tools, which were introduced to address over-indebtedness.
We are prepared to review the construction around the amortization requirement and how much capital you need to put in when buying a home, he says.
"Calibrating again"
According to sources, several relaxations will be presented on Monday. The tightened amortization requirement for mortgage borrowers is said to be abolished, and the mortgage ceiling will be raised from 85 to 90 percent.
Many think it hasn't been effective, says Niklas Wykman about the tightened amortization requirement, and continues:
We will make changes. We will calibrate this regulatory framework again. Exactly how remains to be seen. We will take part in the investigation's results and analyze them first.
The criticism of the measures, which were introduced between 2010 and 2018, consists mainly of two parts. One is that the mortgage ceiling makes it harder for young people to enter the housing market. The other criticism raised by economists is that the amortization requirement becomes a kind of forced savings in the home.
Then it's not certain that resilience has increased. It may have decreased if households don't have other savings. This is criticism that we take with us into the further work, says Wykman.
Warning against over-indebtedness
Before the 2022 election, The Moderate Party promised a paused amortization requirement. A proposal that both the Financial Supervisory Authority and the Swedish Central Bank criticized, citing the risks of over-indebtedness.
How do you view that risk now?
Swedish households are indebted. Swedish companies have high indebtedness.
Therefore, my approach is that we have an openness to changing these systems, but never in a way that compromises financial stability.
So, it's not about abolishing the amortization requirement entirely. Niklas Wykman wants a strong amortization culture and says it's consumer protection to have equity in your home.
It makes the economy as a whole safer, he says.
So, those who hope for a paused amortization requirement shouldn't hope too much?
Loans are something you have to pay back. However, you should be receptive and open to the criticism that has existed, he says.
Johanna Ekström/TT
Facts: Amortization requirements and mortgage ceiling
TTTT
The mortgage ceiling was introduced in 2010 and means that banks are not allowed to lend more than 85 percent of the property's value. The rest must be paid with a cash contribution.
The amortization requirement was introduced in 2016 and means that mortgages exceeding 70 percent of the property's value must be amortized by at least 2 percent annually. If the loans amount to between 50 and 70 percent of the value, the mortgage must be amortized by at least 1 percent annually.
The extended amortization requirement was introduced in 2018 and means that those who earn less per year than 4.5 times the mortgage must amortize an additional 1 percent.
Source: TT, Financial Supervisory Authority
