Ministry of Finance proposal for a new provision introducing an amortisation requirement

Date 29/10/2015

The Riksbank has the following comments on the Ministry of Finance's proposal:

• The Riksbank is of the opinion that the legislative text should make it clear that the aim of the amortisation requirement is to combat financial and macroeconomic stability risks.
• The Riksbank opposes the proposal that Finansinspektionen is to obtain the consent of the Government before the authority can adopt the amortisation requirement. A mandate which provides Finansinspektionen with a high level of independence when implementing macroprudential policy measures is a prerequisite for an effective macroprudential policy.
• The Riksbank opposes the Ministry of Finance's proposal to exempt newly built homes from the amortisation requirement.
• The Riksbank shares the view expressed by the Ministry of Finance that there may be special grounds for granting exemptions from the amortisation requirement. However, the banks' ability to grant exemptions should be limited, temporary and reassessed regularly.

Even though the Riksbank largely welcomes the legislative proposal regarding amortisation requirements, further measures are needed to manage high levels of household debt.

"The Riksbank sees significant risks posed by the increased debt of households. The rapid implementation of much-needed measures is therefore of the utmost importance. An amortisation requirement is a step along the way, but far from sufficient to reduce these risks to acceptable levels. One reason is that the proposed amortisation requirement only affects new mortgages," says Riksbank governor Stefan Ingves.

Read the whole statement here: Consultation response to the memorandum proposing an amortisation requirement