New borrowers are taking larger mortgages

New borrowers are continuing to take larger mortgages in relation to their income and the value of their home, according to this year’s Swedish Mortgage Market, which is being presented today by Finansinspektionen (FI). FI also announces in the report that the temporary exemption from the amortisation requirement will end on 31 August.

"The coronavirus pandemic caused a sharp economic downturn, but we are now seeing signs that that the economic recovery has begun. There was widespread uncertainty in 2020. Despite this, both housing prices and household debt continue to increase faster," says FI Director General Erik Thedéen.

The trend in recent years of borrowers taking on larger loans continued in 2020. Both the average loan-to-value ratio and the average loan-to-income ratio increased.

New borrowers have good buffers in general that enable them to service their loans even if their personal finances were to deteriorate. However, many new mortgagors are sensitive to increases in the interest rate because their loans are so large.

FI's mortgage report also shows that loans that are added to existing mortgages, so-called home equity withdrawals, increased in 2020. This increase in home equity withdrawals can be due to more households choosing to renovate their home during the pandemic.

The temporary exemption from the amortisation requirements, which FI introduced in April last year, expires on 31 August. In total, more than 230,000 households were granted temporary exemption from amortisation payments. Of the new borrowers in FI's sample, 9 per cent had applied for and been granted exemption from amortisation payments. For these borrowers, the exemption corresponded on average to SEK 4,500/month.

"Most households have chosen to continue paying off their mortgage. We view this as a sign of continued strong understanding and tradition among households to amortise, which is positive," says Erik Thedéen.

Webcast presentation

The Swedish Mortgage Market (2021) will be presented by FI's Director General Erik Thedéen and Chief Economist Henrik Braconier in a live webcast at at 10:00AM. After the presentation, representatives of the media are invited to a digital Q&A session.

Invitation to Q&A session

Media representatives are invited to a digital Q&A with Erik Thedéen and Henrik Braconier at 10:30AM. The Q&A is only for representatives from the media and will be held via Zoom.

Time and date: Wednesday, 24 March, at 10:30AM.
Location: To be held only digitally via Zoom.
Registration: To A link to the meeting will be sent to registered journalists.

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