Sweden plans forced mortgage payments

Stockholm

SWEDEN'S government has reached an agreement with opposition parties on a proposal that will force home owners to pay off some of the principal on new mortgage loans, in a move aimed at cooling the country's housing market.

Currently, around 70 per cent of Swedish home owners have interest-only mortgages, meaning that they do not pay off any of the principal of the loan that they have borrowed. The country has a household loan-to-disposable income ratio of more than 170 per cent, one of the highest in Europe, and economists have warned that it needs to take steps to rein in consumer borrowing to avoid a potential crash.

The centre-left government said on Saturday that it would give the country's Financial Supervisory Authority (FSA) a legal mandate to require home owners to pay down some of the principal on new mortgages. REUTERS