Download or read book Housing Price and Household Debt Interactions in Sweden written by Rima Turk and published by International Monetary Fund. This book was released on 2015-12-28 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sweden is experiencing double-digit housing price gains alongside rising household debt. A common interpretation is that mortgage lending boosted by expansionary monetary policy is driving up house prices. But theory suggests the value of housing collateral is also important for household’s capacity to borrow. This paper examines the interactions between housing prices and household debt using a three-equation model, finding that household borrowing impacts housing prices in the short-run, but the price of housing is the main driver of the secular trend in household debt over the long-run. Both housing prices and household debt are estimated to be moderately above their long-run equilibrium levels, but the adjustment toward equilibrium is not found to be rapid. Whereas low interest rates have contributed to the recent surge in housing prices, growth in incomes and financial assets play a larger role. Policy experiments suggest that a gradual phasing out of mortgage interest deductibility is likely to have a manageable effect on housing prices and household debt.
Download or read book Sweden written by International Monetary Fund and published by International Monetary Fund. This book was released on 2011-09-16 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book House Prices and Indebtedness in Sweden written by and published by . This book was released on 2016 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: House prices and mortgage debt in Sweden have grown steeply over the last two decades. This has been driven partly by strong fundamentals but also by the favourable tax treatment of property investment and mortgage borrowing, as well as particular features of the Swedish mortgage market (low amortisation rates and a high share of variable-rate mortgages) that reduce effective debt service costs. The steep rise in household indebtedness creates medium-term risks of a disorderly deleveraging process that could have an adverse impact on the real economy and potentially the banking sector. Accordingly, the Commission (COM(2016) 95 final/2) identified Sweden as experiencing a macroeconomic imbalance deserving monitoring and policy action. In this Economic Brief, we simulate the macroeconomic impact of three potential policy options that could help to address Sweden's house price/mortgage debt dynamic: (i) a tighter mortgage amortisation requirement; (ii) abolishment of mortgage interest tax deductibility; (iii) higher recurrent property taxes. For the latter two measures, the incremental tax revenues from these policies are allocated to reducing labour taxation, so that the measures are ex ante budget-neutral. While specific quantitative outcomes of macroeconomic simulations should be interpreted with care, our analysis suggests that a more ambitious mortgage amortisation requirement could significantly reduce household indebtedness, with no meaningful adverse impact on growth, jobs, or long-run housing investment, and that the two tax-related policy options could also help to reduce indebtedness while raising output, consumption and employment. All three policy scenarios have the (desirable) effect of weighing somewhat on long-run house price growth, without causing a ‘hard landing’ or an excessive reduction in long-run housing investment.
Download or read book Housing Price and Household Debt Interactions in Sweden written by Rima Turk-Ariss and published by . This book was released on 2016 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sweden is experiencing double-digit housing price gains alongside rising household debt. A common interpretation is that mortgage lending boosted by expansionary monetary policy is driving up house prices. But theory suggests the value of housing collateral is also important for household's capacity to borrow. This paper examines the interactions between housing prices and household debt using a three-equation model, finding that household borrowing impacts housing prices in the short-run, but the price of housing is the main driver of the secular trend in household debt over the long-run. Both housing prices and household debt are estimated to be moderately above their long-run equilibrium levels, but the adjustment toward equilibrium is not found to be rapid. Whereas low interest rates have contributed to the recent surge in housing prices, growth in incomes and financial assets play a larger role. Policy experiments suggest that a gradual phasing out of mortgage interest deductibility is likely to have a manageable effect on housing prices and household debt.
Download or read book Nordic Heat Wave written by and published by . This book was released on 2017 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: Notwithstanding comparable macroeconomic and financial conditions, institutional settings and housing policy frameworks, Denmark{u2019}s and Sweden{u2019}s house price dynamics have differed markedly during the past decade. This note analyses recent housing market developments in these countries, explains the policy responses given by the authorities and provides policy conclusions. While there is a potential and growing overvaluation of house prices in Sweden accompanied by strong rise in household indebtedness and growing share of vulnerable mortgage loans; house prices in Denmark have been growing more in line with their fundamentals, accompanied by gradual deleveraging of households and a declining share of vulnerable mortgage loans. Related policy challenges appear to be more pressing for Sweden, but policy gaps exist in both countries with respect to mitigating the risk from excessive house price movements. Most importantly, both countries would benefit from the reduction of the high tax incentives for building up housing debt, from further measures to ease restrictions on the housing supply side and the revision of the property tax system in Sweden. Regional house price divergences need to be closely monitored particularly in Denmark. The large share of vulnerable mortgage loans, id est variable, interest-only (non-amortised) mortgage loans, particularly if combined with high debt-to-income levels poses a risk by making a significant proportion of households in both countries vulnerable to unexpected changes of macroeconomic conditions.
Download or read book Macroeconomic Imbalances written by and published by . This book was released on 2014 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sweden continues to experience macroeconomic imbalances, which require monitoring and policy action. In particular, developments regarding household indebtedness, coupled with inefficiencies in the housing market, continue to warrant attention. Although the large current account surplus does not raise risks similar to large deficits, and is partly linked to the need for deleveraging, the Commission will follow the developments of the current account in Sweden in the context of the European Semester. More specifically, household debt has increased again after a period of stabilisation, as the main contributing factors - low interest rates on mortgages, debt-bias in taxation, slow mortgage amortisation and limited housing supply - remain in place. Various indicators of credit supply and demand conditions do not indicate imminent deleveraging pressures. After stabilising in recent years, house prices increased again in 2013, driven by favourable demand conditions and supply inefficiencies. Moreover, rental market inefficiencies, cumbersome planning procedures and little competition in construction, have also contributed to the house price dynamics. More stable house prices are needed to limit private indebtedness and reduce macroeconomic risks, once debt service costs increase. The recent macroprudential measures are instrumental, but likely not enough, to reduce macroeconomic risks. In particular, strong tax incentives for debt financing are perceived as key drivers of house prices. Higher residential investment would also improve the savings-investment balance. As regards the nonfinancial corporate sector indebtedness the analysis finds that it does not give rise to macroeconomic risks. Moreover, recent reforms in company taxation are likely to further reduce the level of corporate debt by limiting tax minimisation by multinationals.
Download or read book Indebtedness in Early Adulthood written by Jeanette Carlsson Hauff and published by Springer. This book was released on 2019-03-16 with total page 187 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book reviews problems with credit use and causes of indebtedness among young adults, while uncovering possibilities to encourage a healthier attitude towards loans in this segment of the population. Both consumption loans and mortgages are covered in order to adequately represent real-world credit use by young people about to enter adulthood. It focuses on three distinctive actors: the legislative authorities, the financial institution, most commonly a bank, and finally the individual borrower. More specifically, the book discusses the functioning of these three entities in the context of young adults borrowing behaviour, and would appeal to academics, researchers and students of financial institutions and banking.
Download or read book Sweden written by International Monetary Fund. European Dept. and published by International Monetary Fund. This book was released on 2017-11-17 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This 2017 Article IV Consultation highlights Sweden’s continued strong economic growth. Real GDP is expected to rise by 3.1 percent in 2017, driven by both domestic demand and exports growing at a similar pace. Robust job creation of over 2 percent has lowered unemployment to 6.8 percent, or just 4.5 percent excluding full-time students. Housing price increases have moderated somewhat in 2017, to 7 percent year over year in September. Aided by large increases in new dwelling construction, signs of further market cooling have emerged in recent months. Household credit growth has also eased somewhat in 2017. Unexpectedly, strong government revenues in 2016 have carried forward into 2017, with the general government fiscal surplus projected at 1 percent of GDP.
Download or read book Hot Property written by Rob Nijskens and published by Springer. This book was released on 2019-06-14 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt: This open access book discusses booming housing markets in cities around the globe, and the resulting challenges for policymakers and central banks. Cities are booming everywhere, leading to a growing demand for urban housing. In many cities this demand is out-pacing supply, which causes house prices to soar and increases the pressure on rental markets. These developments are posing major challenges for policymakers, central banks and other authorities responsible for ensuring financial stability, and economic well-being in general.This volume collects views from high-level policymakers and researchers, providing essential insights into these challenges, their impact on society, the economy and financial stability, and possible policy responses. The respective chapters address issues such as the popularity of cities, the question of a credit-fueled housing bubble, the role of housing supply frictions and potential policy solutions. Given its scope, the book offers a revealing read and valuable guide for everyone involved in practical policymaking for housing markets, mortgage credit and financial stability.
Download or read book Macroeconomic Imbalances Sweden written by European Commission. Directorate-General for Economic and Financial Affairs and published by . This book was released on 2012 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: On 14 February 2012, the European Commission presented its first Alert Mechanism Report (AMR), prepared in accordance with Article 3 of Regulation (EU) No. 1176/2011 on the prevention and correction of macroeconomic imbalances. The AMR serves as an initial screening device, helping to identify Member States that warrant further in-depth analysis to determine whether imbalances exist or risk emerging. According to Article 5 of Regulation No. 1176/2011, these country-specific ?in-depth reviews? should examine the nature, origin and severity of macroeconomic developments in the Member State concerned, which constitute, or could lead to, imbalances. On the basis of this analysis, the Commission will establish whether it considers that an imbalance exists and what type of policy follow-up it will recommend to the Council. For Sweden, the AMR suggested the need to look more closely at whether Sweden is exhibiting macroeconomic imbalances of an internal and external nature. On the external side, the AMR highlighted a long series of strong current account surpluses which, however, coincided with a loss in market shares over the last years. On the internal side, the high level of private debt was identified as a matter of concern, mainly due to increasing household indebtedness in the context of strong increases of house prices over the last decade. Against this background, Section 2 of this review looks more in detail into these developments covering both the external and internal dimensions, followed by specific focus sections on the housing market and private sector debt developments in Section 3. Section 4 summarises the findings and presents possible policy considerations.
Download or read book The impact of mortgage payments on house prices and household debts written by Erik Hegelund and published by . This book was released on 2015 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Sweden written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2017-10-05 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Technical Note discusses the findings and recommendations made in the Financial Sector Assessment Program for Sweden in the areas of the systemic risk oversight framework and management. To promote accountability, the law should clarify the allocation of macroprudential powers between the government and the Finansinspektionen (Financial Supervisory Authority, FI) and grant the FI a clear legal mandate for macroprudential policy, with full operational independence. The Financial Stability Council, or a similar body—excluding the Ministry of Finance—should have the legal authority to issue recommendations, preferably with a “comply or explain” approach. The law should also ensure that the Sveriges Riksbank’s expertise in financial stability analysis finds a clear institutional role in the oversight of systemic risk.
Download or read book Amortization Requirements May Increase Household Debt written by Mr.Lars E. O. Svensson and published by International Monetary Fund. This book was released on 2016-04-07 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Debt amortization requirements have been suggested as a way to reduce household indebtedness. However, a closer look reveals that amortization requirements may create incentives for both borrowers and lenders to borrow and lend more rather than less. Suppose that a household plans to finance a given housing purchase through a preferred future mortgage path. If that mortgage path violates a new amortization requirement, the household can still achieve its preferred mortgage path, net after savings, by initially borrowing more, investing the excess borrowing in a savings account, and fulfilling the amortization requirement by withdrawals from the savings account over time. This is obvious, if the savings interest rate equals the mortgage rate, because then the excess borrowing is costless. But even if the savings interest rate is less than the debt interest rate, so that the excess borrowing is costly, there remains a strong incentive to initially borrow more than without an amortization requirement. Furthermore, under these circumstances, it is profitable and quite riskless for banks to let borrowers borrow more and invest the excess borrowing in a savings account in the bank, giving lenders an incentive to lend more, not less, than without amortization requirements. Thus, amortization requirements as a way of reducing household indebtedness may be counterproductive.
Download or read book OECD Economic Surveys Sweden 2007 written by OECD and published by OECD Publishing. This book was released on 2007-02-14 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this 2007 edition of OECD's periodic survey of Sweden's economy, OECD finds strong macroeconomic performance and impressive productivity growth coupled with persistently low inflation. The expansion is set to continue. Among the challenges ...
Download or read book The Inequality Paradox written by Douglas McWilliams and published by Abrams. This book was released on 2018-10-09 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt: In his illuminating new book, Douglas McWilliams argues that inequality is largely driven not by a conspiracy of the rich, as Thomas Piketty suggests, but by technology and globalization tat have led to the paradox of rising inequality even as worldwide poverty drops. But what are the implications of this seeming contradiction, and what ultimately drives the global distribution of wealth? What can societies do to reshape capitalism for the 21st century? Drawing on the latest research, McWilliams investigates how wealth is concentrated and why it persistently remains in the hands of very few. In accessible and thought-provoking prose, McWilliams poses a comprehensive theory on why capitalism has not met its match in the form of increasingly disparate income distribution, but warns of the coming wave of technological development—the fourth industrial revolution—that threatens to create a scarcity of unskilled jobs that will lead to even greater inequality and explains what governments can do to prepare for this.From the inquisitive layperson to the professional economist or policymaker, The Inequality Paradox is essential reading for understanding the global economy in its present state. McWilliams is a fresh, authoritative voice entering the global discussion, making this book indispensable in preparing for the imminent economic challenges of our changing world.
Download or read book OECD Economic Surveys Sweden 2012 written by OECD and published by OECD Publishing. This book was released on 2012-12-17 with total page 127 pages. Available in PDF, EPUB and Kindle. Book excerpt: OECD's 2012 Economic Survey of Sweden examines recent economic developments, policy and prospects before taking a more detailed look at labour and social policies as well as housing and financial markets.
Download or read book Diminishing Returns written by and published by Oxford University Press. This book was released on 2022-07-01 with total page 561 pages. Available in PDF, EPUB and Kindle. Book excerpt: A set of state of the art empirical analyses at the country, regional, and global level that work from a new theoretical framework that analyzes the politics of growth and stagnation. As highlighted by the recent debate on 'secular stagnation,' economic growth has slowed down considerably, and this has given rise to a host of new problems, from financial instability to the collapse of mainstream parties. What happens when growththe main mechanism of capitalist legitimationis harder to come by and less broadly shared? And how should we think about capitalist diversity in the context of global stagnation? In Diminishing Returns, Lucio Baccaro, Mark Blyth, and Jonas Pontusson address these questions by bringing together a number of comparative and international political economists with expertise across many different countries and regions. Going beyond the methodological nationalism common in most comparative research, each author departs from a common theoretical framework, the Growth Model Perspective, and contributes to develop it further. The outcome is a new theoretical framework to help social scientists, policymakers, and opinion makers, understand the politics of growth and stagnation, which offers state of the art empirical analyses at the country, regional, and global level.
