Central Bank Governor Stefan Ingves says, once again, that high household debt and home prices are leaving Swedes financially vulnerable.
Central Bank Governor Stefan Ingves says, once again, that high household debt and home prices are leaving Swedes financially vulnerable. Credit: Janerik Henriksson and Christine Olsson / TT

High household debt needs political action, central bank says

3:45 min

The nation's central bank once again called for government action on  Sweden's record high household debt and climbing home prices.

In its most recent financial stability report, released on Wednesday, the bank says that "high and rising household indebtedness currently poses the greatest risk to the Swedish economy."

On average, household debt is 180 percent of disposable income. In other words, someone who makes SEK 1 million per year in income would be on the hook to pay back SEK 1.8 million of debt.

That indebtedness has been increasing over the span of several years thanks to higher property prices and cheap home loans.

On Wednesday, Central Bank Governor Stefan Ingves notes that a recent drop in house prices is a good thing for the country but adds that the bank still expects home prices to increase over the next few years, albeit at a slower rate.

Ingves says the nation's politicians should be working now to keep Sweden's housing market stable and encourage households to pay down more debt.

"Economically speaking, times are good," he tells Radio Sweden. "And that means that in our view, it's a very, very good opportunity to deal with a whole bunch of structural issues in the housing market."

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