Household debt continuing to increase faster than incomes
High and rising household indebtedness poses the greatest risk to the Swedish economy. This Economic Commentary shows that household indebtedness is continuing to increase faster than incomes and that indebtedness is highest among young and urban households. At the same time, the share of households decreasing their mortgage debt has risen over the past year.
The most important conclusions are that:
Household indebtedness is continuing to rise faster than incomes. The average debt ratio increased from 326 per cent in September 2016 to 338 per cent in September 2017.
More households have high debts relative to their incomes. In 2017, 260,000 households had a debt ratio of 600 per cent or more. This is an increase of 27,000 households compared with 2016.
Debt ratios are increasing for all income groups and age groups.
The percentage of households amortising their loans is increasing. 59 per cent of households with mortgages have reduced their mortgage debt between 2016 and 2017. This is an increase of five percentage points compared with earlier years.
To gain a better picture of the risks linked to increasingly indebted households, in 2013 the Riksbank began to gather credit data on all borrowers from the eight largest banks in Sweden. This data has enabled the Riksbank to study how indebtedness has changed over time. It has also been possible to study how it varies between income and age groups and between regions. The Riksbank has previously published analyses of this credit data in a number of Economic Commentaries.
By Karl Blom and Peter van Santen.
The authors work in the Financial Stability Department of the Riksbank.
The Riksbank's Economic Commentaries contain, for instance, short analyses and debate articles. The opinions expressed in Economic Commentaries are those of the authors and are not to be seen as the Riksbank's view.