Henrik Montgomery / TT, Fredrik Sandberg / TT
Emil Källström (Centre Party), Erik Ullenhag (People's Party) and Jakob Forssmed (Christian Democrats), during a meeting of the parliament's finacne committee. Credit: Henrik Montgomery / TT, Fredrik Sandberg / TT

Rule to force amortization has exception with downside

"In general I won't say the new rules will be a big difference from the situation today"
1:57 min

Beginning in June mortgagers will be required to pay off their loan principle, not just the interest. But an exception for new homes could have downsides, says one analyst.

The parliament's financial committee voted through the long-awaited remedy for Sweden's high household debt Thursday. Wednesday. the government made a deal with the center-right opposition parties who demanded an exception for loans used to purchase newly-built homes.

But Arturo Marques, an economist who works for the banking group Swedbank, told Radio Sweden that the exception could distort prices on the housing market.

"The one who buys the new apartment will have one cost, and when that person sells the newly built apartment to another one who has to amortize, they will have another housing cost. That could affect the price on the secondary market," said Marques.

Financial experts have long warned about Sweden's growing household debt, the result of an acute housing shortage, a growing demand, soaring prices, and low interest rates. Swedish Radio news reported that the personal debt of Swedes has outpaced their incomes for the last 25 years.

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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