The Riksbank supports temporary exemptions from the amortisation requirement
News, Consultation responses Finansinspektionen’s previously introduced amortisation requirements have strengthened the resilience of households to various shocks. But the outbreak of the coronavirus and the measures considered necessary to delay the spread of infection have had a very negative effect on economic development in a short space of time, in both Sweden and other countries. The need of households for liquidity and to manage their own economic situation is now increasing. The Riksbank therefore supports Finansinspektionen’s proposal that extraordinary circumstances in the form of a very sharp downturn in the Swedish economy constitute special grounds for a temporary exemption from the amortisation requirement.
For many years, the Riksbank has been warning about the risks of high household indebtedness, most of which consists of variable-rate loans, and has emphasised the importance of taking measured to manage these risks. Although the Riksbank now supports Finansinspektionen’s proposal, it is important that households revert to amortising their mortgages so as not to undermine the amortisation requirement. The Riksbank therefore emphasises the importance of the exemption from amortisation requirements always being temporary and of the exemption as a result of the corona crisis not continuing to apply once the Swedish economy has stabilised.
Consistent with the proposal, the Riksbank also considers it important that credit assessment shall also continue to take amortisation into account and that mortgage agreements shall state that mortgages shall normally be amortised in accordance with the requirements.