Higher housing prices behind increasing household debt

Economic Commentaries, News Since 2011, the increase in Swedish household debt can primarily be explained by home-buyers having, on average, paid a higher price, and therefore have needed to borrow more money, than the sellers once did, and by existing home-owners having increased their borrowing with their home as collateral. Substantial construction of new homes has also affected debt growth, particularly in recent years. These are the conclusions drawn by the Economic Commentary “Developments on the housing market and their contribution to household debt”.

Mortgages are responsible for about 80 per cent of total household debt. Since the mid-2000s, Swedish housing prices have more than doubled. As housing purchases are funded to a large extent by mortgages, the increasingly high prices have been accompanied by rising household debt.

Price development on the housing market can affect household debt in different ways. A long period of rising housing prices, for example, provides greater scope for existing home-owners to increase their mortgages as their borrowing in relation to the market price of the home decreases. Housing prices also influence debt with a certain time lag as it takes time before all homes affected by price changes have been sold on the housing market.

Other factors also affect the development of household debt. For example, increased construction of houses and tenant-owned apartments and conversions of rented accommodation to tenant-owned homes contribute to a rise in the owner-occupied housing stock. These homes are often funded to a great extent by mortgages. In addition, debt is also affected by how much households amortise.

In the Economic Commentary “Developments on the housing market and their contribution to household debt”, the authors illustrate how much various factors may have contributed to the development of Swedish household mortgage debt in the period 2011–2017.


By Robert Emanuelsson, Goran Katinic and Erik Spector, who work or have worked at the Riksbank’s Financial Stability Department.

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.

Updated 19/11/2018
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