Swedbank pledges more funding as govt plans controls

[STOCKHOLM] Swedbank AB, Sweden's largest mortgage lender, promised to increase funding to construction to cool the property market as the government plans to impose even stricter capital standards.

The market "is completely exploding and there's no supply and that's due to structural problems on the housing market," chief executive officer Michael Wolf said in an interview in Stockholm last Thursday. "If we don't manage to boost supply there is a risk that house prices will rise because of a lack of supply and that will affect indebtedness."

Low rates over the past years and a lack of housing supply have fuelled a surge in home prices and driven debt levels to records in the US$550 billion economy. Nobel laureate Robert J Shiller warned as far back as January 2012 that Sweden's property market was in the grip of a bubble, while Paul Krugman, also a Nobel winner, last month said authorities should be worried about the risks.