Swedish people will repay their mortgages after death

Swedish loans
Swedish loans

Most of the people of Sweden will be dead before they can pay off their house loan, according to a recent survey of the country’s central bank, Riksbank, which was based on 4,000,000 individuals and households. On average, the Swedish are exposed to mortgages that are 3.7 times higher than the annual disposable income. In households with the lowest income range, the mortgage debt is four times the annual income. Based on the survey findings, the debt of 25% of respondents increasing from year to year, and 15% remains stable. The remaining 60% manage to repay the mortgage loan, but slowly. If borrowers have managed to reduce their debt in the period 2010-13 continue to reduce by a similar rate, then they will repay their mortgage loan in about 100 years, according to estimates by the economists Gouinstrant Jacob Dylan and the Oelser Riksbank.

Riksbank

Riksbank

In the sample of respondents is reflected 52% of the adult population of the country, which makes the findings of the 3 year research particularly reliable. Overexposure of Swedish people in mortgage loans does not reflect a general consumer culture in this society. Except for mortgage loans, which cover 95% of the total debt of the Swedish, the citizens of the Nordic countries are not big borrowers. The country, however, has overtaken the adverse conditions that affected the rest of Europe and unemployment is low. So people rushed to take advantage of the historically low levels. Therefore, real estate prices have been rising in the recent years. The housing prices in Sweden have quadrupled in the last decade.

Sweden currency

Sweden currency

Nevertheless, the Nobel laureate economist Paul Krugman warned the central bank of Sweden not to proceed to an increase in interest rates, as such a move is deferred at this stage. It’s possible, and I would say very likely, have created a bubble in real estate prices in Sweden, the country is exposed to a huge debt in the mortgage market, stated Mr. Krugman in January. However, given that they have been granted these loans, the situation will deteriorate further if we were an increase in interest rates, he stressed. The Riksbank is planning to raise its key interest rate by early next year. In December 2013 proceeded to reduce the basic rate from 1% to 0.75%, as consumer prices are quite low levels.

Swedish loans

Swedish loans

Several warnings about the amount of mortgage debt in Sweden has been also officials from the International Monetary Fund. As stated in the report of the Riksbank, the total household debt amounted to 2.257 billion Swedish kronor in July 2013. Since this volume of loans is 95% mortgages, 0.6% credit card loans and 4.3% other types of loans. That is about three million people and 1.5 million households have received mortgage loans. The average borrower is exposed to three loans is in his fifth decade of life and the ratio of debt relative to disposable income is 296% in line with the Riksbank.

Swedish loans

Swedish loans

By Nicole P.

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