Posted on 06/03/2013 6:00:15 AM PDT by Kaslin
Swedish repay their mortgages so slowly that it will take 140 years on average, according to the IMF.
The International Monetary Fund lamented Friday that Swedish households pay their mortgages so slowly that they are planning to do an average of 140 years.Why bother paying anything at all? Yet think of the consequences of underwater mortgages on the banking system when an estate does not have enough money to repay loans. A housing bust will have enormous consequences in such a setup.
"Financial stability is [...] reinforced by a steady reduction in repayment schedules - that exceed an average of 140 years," the IMF said in a statement after a mission in Sweden.
This statistic was revealed in March by a government agency, the inspection of the financial sector. It covers loans considered relatively safe, those where the real estate buyer had an initial contribution equal to or greater than 25% of the value of the property and pay the higher monthly interest alone.
According to the Washington-based institution, the Swedish real estate market is a major risk to the economy, along with the eurozone crisis.
"With household debt rising beyond 1.7 times disposable income, a sudden and significant drop in property prices could have an effect on consumption and banks, raising unemployment and further reduce the inflation, and increased the number of non-performing loans and financing costs for banks, "said the IMF.
Martin Andersson, the head of Sweden's Financial Supervisory Authority (Finansinspektionen), expressed his concern about Swedes' mounting debts. “Swedish households today are among the most indebted in Europe and we cannot have household lending that spirals out of control,” Andersson said.Sweden Housing Crash Coming Up
One tool already in place to dampen the growth of Swedish household debt is a mortgage lending ceiling introduced in 2010 which caps the amount home buyers can borrow at 85 percent of the value of the property.
Riksbank head Stefan Ingves has also suggested new rules that would require Swedes to pay down the principal on their mortgages, although Andersson refused to say whether his agency would consider such a rule.
Last year, Swedes' household debt hit a record 173 percent of disposable income, well above the 135 percent level during the height of Sweden's banking crisis in the early 1990s.
Wait! I thought the Swedes were the model of World Citizens to which we should all aspire.
Ping
Hundred+ year debt isn’t all that new. For example they’re common with condominium mortgages in Tokyo and a number of US corps have issued 100 year bonds for many decades now.
Perfect example of the dangers of “Banking While Blond.”
Good heavens, don’t they have foreclosure sales over there? Given 140 years you can turn a fixer-upper into a castle. And back again!
Seriously, who needs mortgages? Just shop!!
It actually begins to make “give everybody a free house” sound like a rational policy alternative.
I suggest we Americans not gloat on this. With refinancings many folks defacto wouldn’t pay off their mortgages before time ends (or before they die). It’s not the good old days (you know, pay ahead & look forward to the day you can celebrate by burning the mortgage) for many Americans.
What the Swedes are doing is just a form of renting. The bank or the government gets to be landlord.
Amazing how the swedes have fooled the world.
Not only is their system based on envy but also dependency on the welfare state. Sadly the money is running out and the only way they can survive is to tax working people to the hilt.
We must not forget their support to the nazi during WW2.hat little reminder is sure to get a Swede to choke on his smörgås.
With reference to your ping to WesternCulture, I think it’s very likely we won’t be hearing from him since, as we both know, from his point of view, Sweden is perfect.
Current low interest rates notwithstanding, this is what “they” want for all of us here in the U.S. — permanent renter status, no ownership, no retirement.
I saw this in Serbia a few years ago while on a trip: forget the mortgage... the HOMES are built over the course of many generations. Homes there are too expensive to build all at once. So, someone will buy some land... then, his son years later might put in a foundation... then, his son’s son might put up the first floor... and so on. Could easily take 100 years to build the house.
in other words, a Reverse Mortgage of the sort Fred Thompson is always pimping on my television.
That's what my liberal friends always said too...
Importing third world types to prop up the illusion that their socialism was working had a downside... Many, many downsides.
Leftist dogma: “Why can’t we be just like Sweden?”
Truth: Sweden can’t be just like “Sweden”.
Can you imagine the amount of interest they must be paying? Look at the government’s relationship to the banks in Sweden. The money is going somewhere.
Sweden;s finished. The sold out cheap - bought into the ‘good times for now’ and ‘pay for it later’...
At least they are confronting the matter and offering some data. I’m certain that most Americans, including most of us in this forum, would be amazed at the low number of American mortgages that ever see the final payment being made. It used to be common to pay off your home and live there in perpetuity. Not any longer. Over the past 20 to 30 years, it has become more common to “trade up” over and over again, throwing ourselves into into an ever deepening chasm of debt and essentially turning everyone into high price renters from the banks, and now Fannie / Freddie.
What the Swedes are doing is just a form of renting. The bank or the government gets to be landlord.
Leftist dogma: “Why can’t we be just like Sweden?”
Truth: Sweden can’t be just like “Sweden”.
Cary Grant (in exaggerated accent): “Everybody wants to be Cary Grant. Even *I* want to be Cary Grant!”
Sweden is good for 2 things, blonds and pop music.
Economics? No sir.
I'm thinking of a HAMP modification that will extend the maturity to 140 years.
I think they have similar mortgages in Japan, some go for 100 years, multigenerational mortgages.
sfl
No worse than today; even if/when you pay off the mortgage, try not paying property taxes.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.