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Credit rating organisation, Moody's praises Swedish bank, SEB

Thursday, 20 December 2012
The initiative from SEB, with its CEO Annika Falkengren, requiring that new mortgage customers amortise their housing loans that exceed 70 percent of the value of their properties over a period of up to 60 years are credit positive.

It has been seen as expected to stabilize the mortgage portfolio over time, the credit rating organisation, Moody's writes in a sector review, published today according to various Swedish media sources.

"We expect that other banks follow will follow suite, a better step towards managing Sweden's increased household indebtedness, "writes Moody's reports Swedish business media outlets.

Moody's notes, however, that repayment of mortgages in Sweden would take a very long time to be realised even if even if the change would be introduced across the sector, and that households remain highly indebted for an extended period of time, which in turn contributes to the sensitivity of households and banks n case of a credit shock.

"The benefit of amortization will be held back by two factors. Firstly, SEB only require repayment of new loans with loan to value (LTV ) levels of at least 70 percent, leaving the majority of the outstanding loans with only interest payments. Secondly, the amortization period up to 60 years is long compared to other European markets," writes Moody's and suggests that Britain, France and Spain have typically 25 - 35 years in their own similar approach

SEB's LTV, is reportedly at 65.2 percent for the mortgage at the end of September this year.
by Scancomark.com Team

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