The Swedish Mortgage Market

2012-03-13 | Reports Consumer Bank

Loan-to-value ratios decreased for the first time in 10 years and the share of households with new loans over 85 percent has fallen by fifty per cent since 2009. These are some of the findings in Finansinspektionen’s follow-up of the mortgage cap.

On 1 October 2010, FI introduced a limit on the loan-to-value ratios of homes, a so-called mortgage cap. During the late autumn of 2011, FI conducted a comprehensive survey to follow up how banks and households adapted to the new regulation.

The results of the survey indicate that the mortgage cap is working. Loan-to-value ratios in Sweden fell for the first time since 2002, the first year comparable data was available.

In addition, the share of households with new loans at a loan-to-value ratio of greater than 85 per cent fell from 20 to 9 per cent in two years. The survey also indicates that basically all households (98 per cent) which received loans that exceeded the mortgage cap amortise their loans.

FI's survey was based on data gathered from the banks regarding lending as well as a detailed sample of granted loans between 26 Sept and 6 Oct 2011. In addition, FI asked the banks a number of qualitative questions regarding their experiences with the mortgage cap.

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