Household debt in Sweden now stands at 173 per cent of disposable income, following a steady climb from just 90 per cent in the mid-1990s, according to figures from the Riksbank, Sweden’s central bank.
That’s well above the current Canadian ratio of 163 per cent and beyond levels reached in the United States prior to that country’s housing crash. Homeowners on both sides of the Atlantic have taken advantage of low interest rates , amassing debts some fear they will be unable to handle when borrowing costs rise or the job market worsens.
The issue has drawn repeated cautions from Swedish central banker Stefan Ingves and was mentioned in a statement following the bank’s recent decision to hold interest rates at 1.25 per cent, despite slowing economic growth. “The issue of debt requires constant attention,” Mr. Ingves said.
The escalation in Swedish household debt has gone hand in hand with house prices, which have increased threefold since 1995 as mortgage rates plunged from 10 per cent to 4 per cent. Not surprisingly then, any debate about household debt eventually winds its way back to questions about the health of the housing market.
Read more: Sweden’s escalating household debt: A familiar story - The Globe and Mail
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