1: What is mortgage investigation?
It is a study of over 450 pages that were handed over to the government on Tuesday. The main mission of the investigator has been to suggest how an EU directive on mortgages will be implemented in Swedish law. In addition, the investigator given the task of proposing measures to increase transparency in the mortgage market.
2: How does this affect me as mortgage borrowers?
Among other things, the introduced a kind of reflection of seven days for all who take mortgages. This is so that customers never be startled into a bad deal, but always have a week to compare with other offers. As a customer, you should never end up in a situation where there is “take it or leave it” as Justice Minister Morgan Johansson (S) put it when I interviewed him about this.
Another interesting change is that it should be strict requirements for anyone wishing to call their advisory for independence, according to the proposal. This requires that you are not receiving compensation from anyone.
In addition, the transparency of the mortgage market increase. Many customers think today it is difficult to determine if the mortgage rate you are offered by the bank is good or not.
3: How will the mortgage market become more transparent?
When a customer receives an interest rate offer bank shall also explain what affects the interest rate. The customer should, inter alia, information on the average interest rate for mortgages of the same kind and find out how high the bank’s financing cost is the type of mortgage. It will also in future be allowed banks to give customers package or offer to become the gold customer, but then the customer must find out how much the interest rate would be without this offer. The bank can not require the customer to buy other products to offer mortgages. In addition, the bank must explain to customers what it is affecting their mortgage rate.
4: Are there any risks with this?
More regulation always means higher costs . Although the aim is to introduce more competition there is always the risk that higher costs for banks herded on to customers in the form of higher interest rates. Quite contrary to what the government and the investigator imagined. But the investigator, judge of appeal Jonas High Current, assures that the investigators tried to find solutions that do not give any unnecessary costs.
5 Why is this so important?
For many Swedes home purchases the largest transaction of life. But evidence suggests that competition is bad in the mortgage market. Eight banks account for about 97 percent of the Swedish mortgage market. Competition from overseas is non-existent and many claim that the Swedish banks’ profit margins are a bit too high. At the same time it is very difficult to know for a customer what is a good interest rate, resulting in an uneven bargaining position vis-à-vis the bank.
6: Is it possible that Swedish take a mortgage loan from a foreign bank?
Yes, it is possible today, but is very rare. The EU directive which is the basis for mortgage inquiry, however change that. In the future it will be easier for creditors to also lend money in other countries. So in the future might Nordea and Swedbank may face competition by Deutsche Bank or the French BNP Paribas in the Swedish mortgage market. Something that certainly can push mortgage rates.
7: Will all proposals become a reality?
Yes, and maybe. The parts of the investigation coming from the EU directive (seven-day cooling-among other things) will be introduced by March 26 next year. These parts have to Sweden to live up to, otherwise it will be fine. The sections dealing with increased transparency is proposed from the investigation and shall be treated in the parliament before being eventually become law.
8: Solves the proposals and amendments problems in the mortgage market?
Let me quote the investigator Jonas Hogstrom, “I do not think we will achieve Nirvana through our proposal.” But there are certainly reasons to be positive. Increased transparency gives consumers more muscles in the future boränteförhandlingar.
9: What more related to the mortgage market right now?
Mortgage Survey, which was handed over to the government on Tuesday is not the only thing that is going on. In August, before the Financial Supervisory Authority (FI) mandatory amortization requirements for new mortgages with an LTV of 50 percent or more, and as of June, banks must tell you about what actually average interest rate they offer their customers.
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