Finansinspektionen’s view on the amortisation requirement

Household debt does not represent a risk to financial stability, but it does increase the macroeconomic risks. If designed to be flexible, an amortisation requirement could reduce these risks.

If households were to amortise more, both their loans and their interest payments would become smaller. In addition, a slow-down in the rate at which house prices are rising would also contribute to slower debt growth. A flexible amortisation requirement contributes in the long run to strengthening household resilience, but a poorly formed requirement could enhance the problem.

Based on the above criteria, FI proposes an amortisation requirement under which new mortgage holders must amortise at least two per cent of the original loan amount down to a loan-to-value ratio of 70 per cent, and thereafter at least one per cent down to a loan-to-value ratio of 50 per cent. FI also takes the position that the amortisation requirement must be monitored and that the regulations reviewed.

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