Finansinspektionen has decided on a general guideline for mortgages collateralised by homes. New loans should not exceed 85 per cent of the home's market value. The new rules will go into effect on 1 October 2010.
In Sweden, mortgages represent the largest portion of households' total indebtedness. In order to increase consumer protection and suppress an unhealthy development on the credit market, FI is implementing new rules as of 1 October 2010.
The rules aim to counteract the use of higher loan-to-value ratios by banks and other credit institutions as a means of competition. Overly high indebtedness means that households are less equipped to handle fluctuations in the housing market and the economy. The new rules will instead increase incentive for households to limit their debt and thereby create better protection for the future.
The new rules only apply to new loans or extensions to existing loans that use the home as collateral. Reissue of existing loans or new credit to replace previous loans issued by another company is not subject to the rules as long as the total credit is not extended.
FI believes that the rules will not have any significant price effects on the housing market.