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John The Pessimist

Swedish House Party Thread

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Sounds familliar

It should. Sweden nearly bankrupted itself in the 90s. This time they've doubled up.

Don't beleive the hype for Sweden's economody - all pumped up migrant spending.

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Sweden limited mortgage terms to no more than 105 years after the average hit 140 years:

Regulators introduced restrictions which will mean mortgage terms - the time homebuyers have to clear the debt - will be drastically reduced to just... 105 years.
The move comes because historically there has been no time limit on mortgage duration.
So as prices rose and affordability became tougher, Swedish banks' response was to extend terms, as had been the case in other high-cost property markets including Japan in the Eighties.
The average term is reported to be 140 years. This meant many people who inherited property but who could not afford to take on the mortgage debt had to sell up.
Swedish banks were quoted in the local press as opposing the move.

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Sweden limited mortgage terms to no more than 105 years after the average hit 140 years:

That's not really the case. Someone explained it in another thread. Anyway, Sweden's totally going to implode at some point.

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It should. Sweden nearly bankrupted itself in the 90s. This time they've doubled up.

Don't beleive the hype for Sweden's economody - all pumped up migrant spending.

All layed out here by some economic genius:

http://www.thelocal.se/20151222/why-is-sweden-set-for-an-economic-boom-in-2016

They do indeed think the refugee crisis, along with shopping and a housings shortage will boost growth

You couldn't make it up!!

Edited by reddog

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'chronic shortage of housebuilding'

Theres no such thing. If they wanted to build, they would. When I say they, I mean whatever shadowy figures run things. Its no different to price fixing in a retail shop, or commodity.

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Nirp and borrowing 6x income... and yet 'lack of housebuilding' still gets the blame

...

Sweden limited mortgage terms to no more than 105 years after the average hit 140 years:

...Indeed,what could go wrong

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The 105 year long mortgages are BS. No one I know has that. It's something else.

Seems I need to eat humble pie. It seems Sweden has gone to total dogpoo since I moved to the UK. They have truly lost the plot.

Interest free mortgages grew like mad and the on average the main house loan. In Sweden you have the "bottom loan", which is the main loan, and then the "top loan" which is typically for the deposit which is/was paid back faster than the bottom loan.

What it says below is that only 4 out of 10 households with a loan to value ratio of lower than 75% are paying back the mortgage. I can only imagine what the figure is for worse LTV. And the average time to pay the bottom loan is indeed 140 years.

+++

I bolånestocken som helhet är däremot andelen av lånevolymen som amorteras fortfarande låg. I stickprovet av nya lån är det endast fyra av tio hushåll med en belåningsgrad lägre än 75 procent (bottenlån) som amorterar. Dessutom är amorteringstiden i genomsnitt mycket lång för de bottenlån som amorteras (drygt 140 år). En viktig uppgift blir därför att följa upp vilka eventuella risker som den svaga amorteringsviljan för lån med belåningsgrad under 75 procent kan medföra på längre sikt. Samverkansrådet för makrotillsyn har därför beslutat att tillsätta en gemensam analysgrupp mellan FI och Riksbanken. Analysgruppen kommer bland annat att analysera långsiktiga effekter av hushållens skuldsättning.

Edited by Snafu

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Sweden's mortgage and banking system rest on loose sand, warns the Riksbank's chief Stefan Ingves.

Quote

 

The Riksbank raises drama in its semi-annual stability report.

"Households high and rising indebtedness pose a serious threat to financial and macroeconomic stability," writes the Riksbank.

Household debt ratio, loan-to-income ratio, has passed 180 percent. The level is sky high both historically and internationally.

Including Swedish housing associations' total liabilities of SEK 428 billion, the quota has already already exceeded 200 percent, according to the report.

Despite a certain slowdown in the housing market in the last year, the risk situation has been tightened, according to Stefan Ingves.

"As long as the debts rise faster than disposable income, the system is constantly blamed," said the Governor of the Riksdag to journalists on Wednesday.

Ingves also emphasized that similar alerts are conducted jointly by international institutions, such as the IMF, the OECD and the EU Commission, and "now private sector people who judge what is happening in Sweden".

 

"Everyone basically comes to the same conclusion. That this does not look good."

High priority also has "vulnerabilities in the Swedish banking system" and its "resistance must therefore be strengthened", the Riksbank writes its report.

A heavy banking sector of four times Sweden's GDP with a large proportion of market lending in foreign currency and large exposure to real estate makes the financial system particularly vulnerable and vulnerable to disturbances, warns the Riksbank.

 

The Riksbank reiterates its demands that banks acquire their own foreign exchange reserves in all the currencies they are substantially exposed to, and that the Financial Supervisory Authority imposes a so-called 5% gross debt requirement for the Swedish major banks as of January 2018 - as a complement to previous regulation for financial airbags. None of the major banks reach higher than about 4.5 percent gross debt today.

But Stefan Ingves does not stay there.

"The Riksbank's new calculations also show that it can be economically profitable with a higher requirement than 5 percent. Therefore it may prove appropriate to raise the requirement further in the future," the Riksbank writes in the new report.

For households, the Riksbank's list of proposals is well-known at this time.

"There is a need for measures that create a better balance between supply and demand in the housing market, and partly tax reforms that reduce household willingness or debt to debt," writes the Riksbank.

Mortgages also need to be braked more directly, with more so-called macro-prudential measures following the mortgage loan and the amortization requirement.

Here are proposed a number of tools that can be put into the hands of Finansinspektionen: debt ratio ceilings, tightening requirements for bank mortgage calculations, limited possibility of lending to variable interest rates and a reduction of current mortgage loans.

https://translate.google.com/translate?depth=1&hl=sv&ie=UTF8&prev=_t&rurl=translate.google.se&sl=sv&sp=nmt4&tl=en&u=http://www.di.se/nyheter/riskerna-okar-har-ar-ingves-kravlista-pa-banker-och-hushall/

 

Edited by Eddie_George

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They have plenty of previous and formed the model for when it all goes pear shaped in the early 90's

Quote

 

Sweden's response to 1990s crisis - a model for toxic bank plan?

Sweden's response to its financial crisis in the early 1990s has emerged as a possible inspiration for British attempts to remove toxic assets from the banking system.
By James Kirkup, Political Correspondent 7:00AM GMT 16 Jan 2009

Much like Britain today, the collapse of a house-price bubble left the Swedish financial sector in dire straits, with lending drying up and strangling the wider economy.
Most of the Swedish banks' bad debts were based on property. The country experienced an unstable house-price boom in the late 1980s that began to burst in 1991.
Many banks were left with large amounts of bad debts, loans secured on properties that had tumbled in values to borrowers whose ability to pay had fallen.
The Government responded by creating new "bad banks," state-owned financial vehicles that bought the distressed assets from the banks, allowing them to improve their balance sheets and lend more freely.
The banks themselves were forced to pay a price for having their toxic assets taken off their hands. They were forced to declare heavy losses before the transaction, and give the government warrants giving the state the right to buy shares in the banks at preferential rates in the future.

In all, Sweden spent the equivalent of 4 per cent of its GDP buying up toxic assets from banks. Teams of specialist financiers were then employed in the bad banks to maximise the value of the new government assets.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4248284/Swedens-response-to-1990s-crisis-a-model-for-toxic-bank-plan.html

 

 

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One of the aspects of the UK housing crisis is that people have bought into the myth that we are a 'small country' and 'there is no space'.  ********, we have loads of space, its just how we choose to use it.  I do wonder if they are trying to sell that lie in Sweden?

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46 minutes ago, dougless said:

One of the aspects of the UK housing crisis is that people have bought into the myth that we are a 'small country' and 'there is no space'.  ********, we have loads of space, its just how we choose to use it.  I do wonder if they are trying to sell that lie in Sweden?

Twice the land mass and a population of 8 million.  It would be a tough sell. 

It's not even like they have much in the way of mountains stealing space, Norway got most of those.  Add to that, the houses are knocked up with wood and they've got trees all over the place so building materials aren't exactly in short supply oe expensive to procure.

 

.

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57 minutes ago, dougless said:

One of the aspects of the UK housing crisis is that people have bought into the myth that we are a 'small country' and 'there is no space'.  ********, we have loads of space, its just how we choose to use it.  I do wonder if they are trying to sell that lie in Sweden?

yes, total fantasy. Something like 3% of English land is housing. Argument used to some extent in Australia ( yes, really), ie. all the 'desirable' land is taken. Garbage of course, there's an abundance of coastal (non-desert) land available there. 

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There really are very few countries where there is a genuine lack of land suitable for housing. Using that argument is an admission you can't admit the truth, cheap credit drives prices. Whenever the housing crisis is discussed it's the prices not a lack choice that's the problem. Pre the credit crunch central banks were happy to acknowledge that the cost of credit drove house prices. Now they can not speak that simple truth lest they allow their 'recovery' appear as the fake that it is, built on  nothing more than a thin veneer of feel good from housing bubbles.

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1 hour ago, Blod said:

There really are very few countries where there is a genuine lack of land suitable for housing. Using that argument is an admission you can't admit the truth, cheap credit drives prices. Whenever the housing crisis is discussed it's the prices not a lack choice that's the problem. Pre the credit crunch central banks were happy to acknowledge that the cost of credit drove house prices. Now they can not speak that simple truth lest they allow their 'recovery' appear as the fake that it is, built on  nothing more than a thin veneer of feel good from housing bubbles.

True  that, but it must be as much about planning laws that artificially shrink land availability and willingly drive the Ponzi (until voters cannot take it anymore)

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17 minutes ago, PropertyMania said:

True  that, but it must be as much about planning laws that artificially shrink land availability and willingly drive the Ponzi (until voters cannot take it anymore)

When they cannot take it any longer, what are the voters going to do?

 

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Another win for Steve Keen. Sweden was one of seven 'Zombies To Be' he identified last year alongside China, Canada, Australia, South Korea, Hong Kong and France

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4 hours ago, Democorruptcy said:

When they cannot take it any longer, what are the voters going to do?

 

Parties switch policies away from HPI - starting to happen in UK, will likely accelerate

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