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The reality of buying a house in Sweden - 125 years to pay off a home

Monday, 21 November 2011
We reported yesterday about the ballooning Swedish household debt and how the Swedes are borrowing more to pay their very expensive homes. More on that news is that on average, it will take 125 years for a buyer of a condominium to pay off their loans.

One factor is that more than half of the major banks' loans are now interest-only.
The SCB will pay an average of one tenant borrowers 0.85 percent of the loan per year. For homeowners, it is at 1.4 percent.

According to Statistics Sweden (SCB), tenants pay on average 0.85 percent for their loans but a for homeowners, the corresponding figure of 1.4 percent annually on their mortgages.


This means that it takes today, 125 years for tenants to pay off their loans, according to Swedish television analysis.
Customers are encouraged to amortise their loans but that way things look, about half of those customers who do not amortise at all.

Swedish house prices have grown and it continues to remain the fastest growing in Europe and possible the world. As a result, the Swedish mortgages are also growing fastest in Europe.

According to figures from the OECD organization, the Swedish house prices over the past five years have increased the most in Europe.
According to the Swedish National Housing Loan Board there is a direct correlation between the rapid rise in prices and loan explosion.
“These interest-only loans, to borrow without paying off, it makes society vulnerable. We would like to come back to a savings culture in Sweden that we had before, so we will not be as vulnerable to economic downturns,” said Housing Loan Board Housing analyst Bengt Hansson to Swedish television.

Swedish television did a survey with the four major Swedish banks on debt repayments. Not everyone has responded to all questions. But according to Swedbank, today in contrast to the past, there might be a tougher loan requirements repay of about 52 percent of bank customers on their loans.

Therefore the reality of the Swedish housing market is that houses or apartment are extremely expensive – far above average earnings that is one is to buy one, it will take 125 years to pay off.
By Scancomark.se Team

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