This morning Erik Thedéen makes short comments regarding the Banking Legislation Package at the ECON meeting in Brussels.
The amortisation requirement that was introduced last year has had a slow-down effect thus far. Households with new mortgages are borrowing less and buying less expensive homes, but the risks associated with high household debt remain.
FI decided on 29 March 2017 not to change the countercyclical buffer rate. The buffer rate of two per cent, which has applied since 19 March 2017, shall thus continue to apply. The countercyclical buffer guide is set at 0 per cent.
SUMMARY: In Sweden, both the percentage of mortgages that have a variable interest rate and household debts have risen sharply. This combination has made house-holds sensitive to rising interest rates.
Finansinspektionen publishes the capital requirements of the ten largest Swedish banks and credit institutions as of the end of the fourth quarter 2016.
The vulnerability indicators FI identifies in this analysis show a slightly elevated level of vulnerability for liquidity. Several indicators contribute to this.
The next occasion on which Finansinspektionen (FI) will decide on the countercyclical buffer rate is in March. The preparatory work ahead of the next decision shall focus on maintaining the rate at its current level, which is currently 2 per cent.
FI is tasked with setting a countercyclical buffer rate each quarter. The buffer rate is set today via FI’s regulations (FFFS 2014:33) regarding the countercyclical buffer rate.
Loans make it possible to smooth out consumption over a lifetime. Household indebtedness is high and in recent years household debt has risen faster than both income and GDP. Household debt consists primarily of mortgages.