About Us |Contact Us| political-economy



Weather Forecast













The Market Quotes Powered By Forexpros, the Forex, Futures, and Stock Markets Portal.






jobs-carriers



Swedes are borrowing more and more to finance exaggerated overvalued house prices

Sunday, 20 November 2011
Swedish households are increasing their borrowing the most of all in Europe according to a latest comparison of mortgage that Swedish television investigative news program Rapport commissioned.

Since 2001, the Swedes increased their housing loans with over ten percent annually, except during the financial crisis in 2008. Households have loans of more than one and a half times annual income.

Now there is renews warning of raised levels household debts, although this is not the first time concerns have been raise about Swedish bulging household debts.

Reports after reports both from home and aboard have shown that the Swedes have in the past five years had Europe's highest growth rate of housing loans – money borrowed to finance home ownership.  The growth is also attributed to the over exaggerated Swedish house prices. Various authorities have warned that Swedish house prices are too over valued such that only earning growth which has been lesser that would have been expected can not finance most of these houses

Advertisement


When compared to the 16 other OECD countries, Sweden is at the top along with Australia, according to comparison made with the help of the Housing Credit Board, the OECD and the European Central Bank (ECB).

Despite the alarming assessment of the debt crisis in Europe, Swedes continue to increase their debt burden, although the high rate of increase was broken this year. The average is still a 7 percentile increase against last year.

A brief fact
Swedes' love for loans is a relatively new phenomenon. The Swedes have historically during the 1900s had a relatively high private savings and low debt.
But in the '80s when property prices rose helped by government subsidies and high inflation that Swedish home buyers took on increasingly larger loans.
Then came the property crash 20 years ago, many were forced to reduce its debt and households was for a little while more cautious about debt to settle.

But in the mid 1990s loaning rose started growing again. In 1970, households, according to statistic Sweden, took an equivalent of 77 percent of annual income in loan. Today the trend is that the Swedes have more than twice as much in loans relative to household income.

In the second quarter households had debt of 162 percent of annual income. This means that a family with an annual income of Skr600, 000 today has debts of nearly Skr 1 million.
40 years ago a family with the same annual income had debt of approximately Skr 460,000 on average.
By Scancomark.se Team




Print Friendly and PDF | Report Error | Write to the editor | Complaint about this article | Make a comment

What do you think about the above article? Please leave us a comment and reaction. Thank you
  • Should be Empty:













































Back to top