New mortgagors are amortising, borrowing less and buying less expensive homes, but many still have high debt. These are FI’s conclusions in this year’s mortgage report. FI is also publishing an FI Analysis that shows the stricter amortisation requirement has reduced the percentage of borrowers with high debt in relation to their income.
Finansinspektionen’s report, Stability in the Financial System, shows that the high level of household debt and rising house prices are causing vulnerabilities to build up in the Swedish economy. FI therefore would like to introduce a stricter amortisation requirement for new mortgage holders who take large loans in relation to their income.
The amortisation requirement that was introduced last year has had a slow-down effect thus far. Households with new mortgages are borrowing less and buying less expensive homes, but the risks associated with high household debt remain.
Household debts are continuing to develop in an unfavourable direction. This is one of the conclusions in FI's Stability Report, which is being published today.
New mortgages must be amortised down to 50 per cent of the value of the residential property. The amortisation requirement will apply to all new loans that are collateralised by a residential property. The property may be revalued every fifth year.
Swedish households are borrowing more in relation to their income. Despite this, they have in general sufficient margins to make their payments. FI presents these and other conclusions in this year's Mortgage Survey, which is being published today.
FI today sends out a proposal which requires amortization of mortgages. The proposal is that new mortgage holders must pay their mortgages down to a 50 per cent loan-to value ratio. Starting on 1 June 2016, the amortization requirement will apply to all new loans which are collateralized by a home.
Finansinspektionen (FI) is of the opinion that it is necessary to put an amortisation requirement in place. At the same time, the Administrative Court of Appeal of Jönköping, among others, finds deficiencies in the legal basis for FI to decide on an amortisation requirement. FI determines that the legal status is unclear and that FI's mandate needs clarifying. Therefore, at present, FI is not progressing with the amortisation requirement.
More households are amortizing, and they are more resilient than they were a year ago. At the same time, many households with lower loan-to-value ratios choose to refrain from amortizing, confirming the need for an amortisation requirement. These are some of the conclusions from this year's mortgage survey.
New mortgage holders must pay their mortgages down to a 50 per cent loan-to-value ratio. The amortisation requirement will apply to all new loans granted that are collateralised by a home, as of 1 August 2015. Properties may be revalued every fifth year. The rules will apply to all banks and credit market companies. This is proposed by Finansinspektionen (FI).