Sweden's Mortgage Rules Recommendations

STOCKHOLM (Reuters) – A government-appointed commission suggested on Monday that Sweden should relax mortgage borrowing and repayment regulations to make it easier for new buyers to enter the housing market.

Peter England, the head of the commission, stated, "There is room to ease these measures without undermining financial stability." The government is expected to make decisions regarding mortgage rule adjustments in the spring, according to Financial Markets Minister Niklas Wykman.

Swedish households are among the most indebted in Europe, with debts around 190% of disposable income. The existing mortgage repayment rules were established after the financial crisis of 2008-2009, aimed at mitigating risks to the banking system.

Current regulations include a borrowing ceiling and stricter repayment rules for higher borrowers, which critics argue complicate the process for first-time buyers and those lacking capital.

The commission noted that heavily indebted households faced challenges during a recent surge in inflation and interest rates, leading to a decrease in consumption and a negative impact on the economy.

Among its recommendations, the commission proposed increasing the borrowing ceiling from 85% to 90% of a property's value and relaxing repayment requirements for higher borrowers. Additionally, it advised the government to introduce an income guideline for borrowing, limiting mortgage loans to approximately 5.5 times a household's annual gross income.