FI welcomes inquiry into macroprudential policy

The Swedish financial market regulator, Finansinspektionen (FI), has issued a press statement in view of the government’s announcement to set up a new committee to analyze the current prudential measures that are imposed on financial institutions in an effort to protect borrowers from „over“-indebtness. Specifically, the committee’s key objective will be to analyze how the current measures, including loan-to-value (LTV) ceilings and minimum amortization levels, are working and whether or not any adjustments should be made to further protect borrowers, dampen inflation in housing prices, and improve financial stability overall.
In its statement, FI welcomes the foundation of the new committee and the upcoming analysis. In its opinion, the current measures were quite successful in bringing about resilience to households in Sweden. In fact, „new mortgagors [are] borrowing less and buying more inexpensive homes than they otherwise would have done“, so the regulator. Additionally, the growth in housing prices have slowed. However, due to the fact that LTV ceilings and minimum amortization requirements limit the borrowing possibilities of households, an analysis of the appropriateness of the current measures is well indicated.