Measures to counteract household indebtedness – amortisation requirement

FI makes the assessment that an amortisation requirement that is applied in a flexible manner will strengthen in the long run household resilience to shocks. An amortisation requirement will keep house prices down and slow the rate at which debt is growing, and higher amortisation payments will help households reduce their debts and thus their interest expenses.

FI's proposed amortisation requirement entails that new mortgage holders must amortise at least two per cent of the 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.

It is FI's assessment that an amortisation requirement should only be applied to new loans in order to avoid intervention in existing contracts, which could have significant consequences for households.

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