Sweden: Financial Sector Assessment Program Update: Technical Note on Household Indebtedness: Implications for Financial Stability

IMF Staff Country Reports, September 16, 2011

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Canonical URL: Sweden: Financial Sector Assessment Program Update: Technical Note on Household Indebtedness: Implications for Financial Stability

As in other advanced economies, there has been a significant run-up of household debt in Sweden during the last two decades accompanied by rising housing prices, prompting concerns about sustainability and the implications for financial stability.
The rise in household debt and the banking system’s increased exposure to mortgage debt resulted with the changes in the macroeconomic environment.
The note explores implications for financial stability of household indebtedness as well as Sweden's specific institutional features to ensure resilience of the financial system.

Household indebtedness:
- Significant run-up of household debt in Sweden during the last two decades.
- Accompanied by rising housing prices.
- Raised concerns about sustainability and implications for financial stability.
Banking system exposure:
- Increased exposure of the banking system to mortgage debt as household indebtedness rose.
- Exposure amplified by changes in the macroeconomic environment.
Institutional features:
- The note examines Sweden's specific institutional features to ensure resilience of the financial system (details available in the full technical note).

Subjects: Covered bonds, Financial institutions, Housing, Housing prices, Loans, Mortgages, National accounts, Prices
Keywords: covered bond, covered bond funding, covered bond holder, covered bond issuance, covered bond law, Covered bonds, covered bonds bond market, CR, debt, debt affordability, EU covered bond bond market, Europe, financial crisis, Global, house price, household debt, Housing, Housing prices, interest rate, ISCR, Loans, mortgage, mortgage interest rates, Mortgages, price