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Economy 'increasingly vulnerable' due to high debt, home prices

Published torsdag 2 juni 2016 kl 09.00
Riksbank governor: When debt level goes up you have to be more careful
(3:51 min)
Han har runda glasögon och är klädd i kostym.
Stefan Ingves är chef för Riksbanken. Det är statens egen bank. Credit: Marcus Ericsson/TT

Sweden's Central Bank continues its drumbeat of warnings about the nation's too-high debt levels and housing prices that have only continued to climb.

In its latest report on Sweden's financial stability, the bank said both trends were causing "increasing vulnerability" to the Swedish economy.

Homes prices and household debt levels in Sweden have risen steadily since the mid-1990s and it is not the first time the Riksbank, as the central bank is called in Swedish, has raised the alarm over their growth.

Swedes are taking on more debt to buy homes and then relying on the white-hot property market as a way to pay off their mortgages. This means a possible crash in housing prices could send shock waves through the economy.

Governor of the Riksbank Stefan Ingves tells Radio Sweden that measures must be taken now to rein in debt and prices before the risks to the wider economy become too great.

"When the debt level goes up you have to be more careful and you need to be worried, and be worried more than in the past," he says. "It's hard for us. In terms of decision-making, we don't have the powers to decide the functioning of the housing market."

Ingves adds that the issues fueling the runaway housing market are "well understood ... but it's one thing to understand what is going on; it's another thing to get to a decision-making point."

Our journalism is based on credibility and impartiality. Swedish Radio is independent and not affiliated to any political, religious, financial, public or private interests.
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