170 000 households in debt above 600 percent – Swedish Dagbladet

In 2014, approximately 170 000 households have a debt ratio of 600 percent or more. Photo: Tomas Oneborg / SvD.

Sweden have more than 590 000 household debt ratios exceeding 300 percent, which represents 40 percent of all households with mortgages. Among the new mortgage borrowers, the corresponding proportion nearly 60 percent.

It writes the Riksbank in its Financial Stability Report said on Wednesday.

“If household in Sweden with a debt ratio of 300 percent or more would adapt its consumption in a similar way as was done in Denmark during the financial crisis would be the level of their consumption according to the Riksbank’s calculations could be reduced by about 5 percent, “writes the bank.

In 2014, around 170 000 household debt ratio of 600 percent or more. This represents over 10 percent of all households with mortgages. Also among the new mortgage holders had about 10 percent a debt ratio of over 600 percent.

With today’s low interest rates, these domestic interest payments after tax approximately 8 percent of their disposable income. When mortgage rates rise to more normal levels (6 percent) were the interest payments increase to about 25 per cent of their disposable income.

“ For a household with a debt ratio of 600 percent, a loan at just over 2 million, and a disposable income of SEK 30 000 a month, this would mean that interest costs after interest deduction increases from 2500 SEK to 7500 SEK per month, “the Riksbank.

With a stressed mortgage rate (8 percent) would interest payments amount to about 35 per cent of disposable income. This would mean an interest expense for interest deductions of approximately SEK 10 000 per month.