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DEBT CRISIS

Swedish home loans in rapid rise

Seemingly undeterred by the debt crisis, Swedish households are taking out more new loans than any other Europeans, according to a comparison of mortgages made by national TV station SVT.

Published: 20 November 2011 10:05 CET

Swedish home loans in rapid rise

Since 2001, Swedes have increased their mortgages by over ten percent annually, except during the financial crisis in 2008. In average, a Swedish household has a loan of over one and a have times the annual salary.

Warning cries are now being raised, concerned that the rapid increase of Swedes’ debts will lead to a situation similar to other European countries.

“Before crises break out we often see a rapid mortgage growth,” said Bengt Hansson, of the National Housing Credit Guarantee Board (Statens Bostadskreditnämnd), to SVT.

Over the past five years, Swedes have had Europe’s highest growth rates on mortgages. Even compared to 16 other OECD countries, Sweden is top of the charts, joint with Australia.

Despite the alarming reports of the debt crisis in Europe, Swedes are continuing to increase their debts, although the high growth rate was lessened somewhat this year. The average remains a seven percent increase on last year.

The mortgage comparison was made by SVT, the National Housing Credit Guarantee Board, and the European Central Bank.

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Court turns down AfD-led challenge to Germany's spending in pandemic

Germany last year ratified the €750-billion ($790-billion) fund, which offers loans and grants to EU countries hit hardest by the pandemic.

The court in Karlsruhe ruled on two challenges, one submitted by a former founder of the far-right AfD party, and the other by a businessman.

They argued the fund could ultimately lead to Germany, Europe’s biggest economy, having to take on the debts of other EU member states on a permanent basis.

But the Constitutional Court judges ruled the EU measure does not violate Germany’s Basic Law, which forbids the government from sharing other countries’ debts.

READ ALSO: Germany plans return to debt-limit rules in 2023

The judgement noted the government had stressed that the plan was “intended to be a one-time instrument in reaction to an unprecedented crisis”.

It also noted that the German parliament retains “sufficient influence in the decision-making process as to how the funds provided will be used”.

The judges, who ruled six to one against the challenges, did however express some reservations.

They questioned whether paying out such a large amount over the planned period – until 2026 – could really be considered “an exceptional measure” to fight the pandemic.

At least 37 percent of the funds are aimed at achieving climate targets, the judges said, noting it was hard to see a link between combating global warming and the pandemic.

READ ALSO: Germany to fast-track disputed €200 billion energy fund

They also warned against any permanent mechanism that could lead to EU members taking on joint liability over the long term.

Berenberg Bank economist Holger Schmieding said the ruling had “raised serious doubts whether the joint issuance to finance the fund is in line with” EU treaties.

“The German court — once again — emphasised German limits for EU fiscal integration,” he said.

The court had already thrown out a legal challenge, in April 2021, that had initially stopped Berlin from ratifying the financial package.

Along with French President Emmanuel Macron, then chancellor Angela Merkel sketched out the fund in 2020, which eventually was agreed by the EU’s 27 members in December.

The first funds were disbursed in summer 2021, with the most given to Italy and Spain, both hit hard by the pandemic.

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