How the Swedish mortgage market has shaped the financial system

The Swedish mortgage market – on which households that need mortgages meet lenders such as banks – is an important part of the financial system. How the Swedish mortgage market has developed over time and how it works today are factors that touch upon many of the important issues currently under discussion. One such issue is household indebtedness and whether the level of indebtedness entails risks. Another is how the banks set the interest rates that the households have to pay for their mortgages and how the banks fund the mortgages.

The report From A to Z – the Swedish mortgage market and its role in the financial system describes how the market has developed over time and how it has come to shape the financial system of today. The report also discusses the factors that have contributed to the increase in household demand for mortgages, in particular during the 2000s, as well as the factors that have enabled the banks to supply the households with a larger volume of mortgages. The report also explains how things work in practice when households take mortgages and banks fund these mortgages on the international capital markets.

It notes that Sweden now has a system in which household saving is largely in securities rather than in bank accounts and in which mortgages in Swedish kronor are largely funded in foreign currencies through the international financial markets.

"Our hope is that the report will contribute to a greater understanding of the form and function of the Swedish mortgage market, its strengths and weaknesses. We also hope that the report will provide a basis for continued discussions on the form this market should take in the future," says Kasper Roszbach, Head of the Financial Stability Department.