The investigation suggests milder repayment requirements and a higher limit on the size of mortgages, which is expected to drive up housing prices and household debts. However, the Riksbank is skeptical of the new proposals and warns of risks to financial stability. This criticism carries weight, as SEB highlights in their newsletter, “Ögat.”
SEB anticipates an increase in the mortgage ceiling and the removal of the tightened three percent repayment requirement. However, it is uncertain whether the two percent repayment requirement will be eased – such a change may be further down the line, according to the bank.
“Riksbanken has clearly opposed the changes and emphasized the positive effects the measures have had on the, in an international perspective, high Swedish household debts,” SEB writes, adding:
“The Minister of Finance has stated, however, that the government intends to implement certain changes in the spring and that the development of house prices and household loans will likely determine the extent of the changes.”
While the Financial Supervisory Authority is primarily responsible for macro-prudential supervision, the Minister of Finance has hinted that the authority may lose some of its responsibilities. The most likely scenario is that the government will take over these responsibilities.
“Upward risk for housing prices”
According to the bank, housing prices are expected to increase by 6% this year and by 5% per year in 2025 and 2026. This forecast is made without taking new regulations into account.
“Our assessment is that the changes will be less than what the investigation proposes, but altered macro-prudential supervision poses an upward risk for housing prices.”
Overall, the proposed changes in mortgage regulations and repayment requirements are expected to have a significant impact on the housing market and household debts in Sweden. The differing perspectives of the Riksbank, SEB, and the government create a complex landscape of uncertainties and potential risks for the financial stability of the country.