Banks will have the possibility of offering all new and existing mortgagors an exemption from the amortisation requirements due to the spread of the coronavirus and its effects on the Swedish economy. The exemption will be in force until the end of June 2021. This enables Finansinspektionen to provide all mortgagors with greater manoeuvrability in these uncertain times.
The spread of the coronavirus (COVID-19) is creating widespread suffering around the world, and efforts to offset this have created major disruptions to the economy. In Sweden, the economic forecast is rapidly deteriorating. Due to the uncertainty about the future, many households are becoming concerned about their personal finances.
Over the past few years, FI has introduced amortisation requirements to lower the debt of mortgagors and make them more resilient. To strengthen mortgagors' ability to handle a continued downturn in the economy, FI will allow banks to temporarily grant an exemption from the amortisation requirements.
Households must currently lose their income due to unemployment or sickness in order for banks to grant amortisation exemption. FI is now proposing that the banks be given the possibility of granting amortisation exemption to all new and existing mortgagors due to the sharp downturn in the Swedish economy in the wake of COVID-19.
It is however still up to the banks to decide on whether an individual household may be granted an amortisation exemption based on an assessment of its specific situation and payment ability.
The exemption is available to mitigate the economic impact of the corona virus on Swedish mortgagors and is proposed to apply until the end of June 2021. FI will then evaluate the state of the Swedish economy to assess whether the exemption needs to be extended or if it can be removed.
The proposal will now be submitted for consultation with the aim of going into effect on 14 April of this year.
FI's most recent report on Swedish mortgages shows that in general new mortgagors have good margins for servicing their loans under weaker economic conditions. A greater possibility for amortisation exemption strengthens the margins for mortgagors.
"The amortisation requirement increases Swedish mortgagors' ability to handle difficult times. When the economy is under a lot of pressure, it is reasonable to give households the manoeuverability to use those margins," says FI's Director General Erik Thedéen.
The proposal will be presented by Director General Erik Thedéen and FI's Chief Economist Henrik Braconier at a press conference today. They will present at the same time FI's most recent mortgage survey.
Time: Thursday, April 2, 10:30 AM
Location: Finansinspektionen, Brunnsgatan 3, Stockholm.
The conference is only open to representatives from the media but will be broadcast live at fi.se, Published/FI Play/Video.
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