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Growing worries over real estate mortgages in Sweden – younger home owners and women fare worse

Thursday, 17 May 2012
Swedish household debt is still large and much of it is held in their inflated house prise bills such as real-estate
mortgages. In the past two years when the Swedish economy was doing fine while the rest of Europe toasted, Swedish people were not very worried about how much their household bills were.

But now three in ten Swedish people are worried about the size of their mortgages. The biggest concerns are within the young people and women, a new survey for the state mortgage company, SBAB conducted by polling organisation Sifo show.

“We have raised questions about how people cope with their housing. And it shows that many are worried about getting a rise in interest rates on their mortgages,” says Maria Malmqvist private economist in the government – owned SBAB.
About two out of three Swedes own their own homes. And as the prices have risen sharply today, many are holding large loans. There is an eye on what an interest rate increase would have as impact on the household economy. Every tenth person says they do not know how they will be affect by the interest rate increase of say, three percentage points.

In addition, concerns about the housing loans are worrying. 34 percent of those surveyed said they worried often, for women the figure was over 40 percent. Something that Maria Malmqvist think can be explained by the fact that women overall have a poorer economy than men. They work much as part-time and often have low-wage occupations.
Those who felt least worried were residents of metropolitan areas in Gothenburg and Stockholm.

- They worry about not more than any other, although they have much higher loan which is surprising, says Maria Malmqvist.
- It may be due in part to city dwellers have higher incomes, but also that they feel more optimistic after the extreme price increases that have been primarily in Stockholm, and as you might expect will continue.
On SBAB think also a continued rise in prices in the housing market, but not as it was during the 2000s.

Three out of ten felt that the loans were high compared with income. Young people made that majority - four out of ten under 35 said that. In the group over 55 years, only two out of ten who felt that way.
The disparity in incomes between the old and young could explain this phenomenon. The advice to those who are concerned about a possible rate hike is sure to have a buffer. A benchmark is to set aside money for an interest rate of 5 – 6 per cent every month whether they have variable or fixed interest rate.
By Team

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