Amortisation requirements a step in the right direction

Date 17/04/2015

Household indebtedness in Sweden is high in both historical and international terms. The risks associated with the Swedish households' high and growing indebtedness have long been a cause for concern. It is therefore important to reduce indebtedness.

The Riksbank also considers that:

• Finansinspektionen should continually evaluate the application of the amortisation requirements and their consequences.
   
• There may be special grounds to grant exemptions to the amortisation requirements and the Riksbank thus shares Finansinspektionen's view on this issue.
   
• The proposed regulations on permitting a reassessment of the value of housing in the event of a substantial change in value should be clarified.
   
• The possibility of reassessing the value of housing every fifth year makes it even more important to take measures that effectively limit the risk of debts continuing to increase more rapidly than incomes.

Although the proposed amortisation requirements are a step in the right direction, the Riksbank's assessment is that they are insufficient to fully deal with the problems associated with household indebtedness. This is because the amortisation requirements are expected to have only a limited effect on total indebtedness in Sweden. Moreover, it will take a long time before the effects have an impact. There is still therefore a great need to introduce further measures.