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Swedish household debts growth blamed on variable mortgage and calls for its to becomes more expensiveWednesday, 22 February 2012
As the Swedish commercial banks raised their interest margins sharply last year, the flip effect is that Swedish household debt grew by five percent in 2011.
The Swedish government is aware of the growing household debts which the EU also pointed out that it is a very bad thing for the Swedish economic future. As such Alexandra Leonhard of the Swedish Housing Credit Committee is worried and believes that the time for cheap variable mortgages are over.
“We have a stressed banking sector. It costs more to get loans, and then it's silly that we have households that expect that things should continue to be the way they were before,” says Alexandra Leonhard.
The variable mortgage rates have remained very low in Sweden compared with the international environment since the 2000s. This means that Swedish households, over half of them have floating mortgage rates on their household loans.
One explanation is that it has been too expensive for them to fix their loans in Sweden, according to Alexandra Leonhard.
“Compared to Denmark and Germany, it is too expensive to design a fixed mortgage loan for say, ten years in Sweden. And it is expensive, also to redeem loans especially at an earlier than planned period if one chooses to move to other flexible options.
By Scancomark.se Team