In the Swedish mortgage market, people have long talked about "insiders" and "outsiders". The "insiders" who have long owned their home and were able to benefit from the low interest rates and favorable tax conditions. And above all, young outsiders, who have seen higher and higher requirements for entry into the boom market.

We are now facing a deep recession with high unemployment. In Finansinspektionen's stress tests, it is clear that new homeowners who are also single households can find it difficult to manage their finances if they lose their jobs. And that group has increased during the past year, according to the Swedish Financial Supervisory Authority.

A homemade bomb

Since the financial crisis, international analysts such as the EU and the IMF have warned of how vulnerable the Swedes and the Swedish economy are to a shock to the economy. The record low interest rates linked to housing shortages and the boom have created an easily adapted home-made bomb. We now see the gaps in the patchwork and legislation that happened without politicians daring to take hold of the dynamite: to gradually lower interest rates and not create more cheap housing in especially metropolitan regions.

The cowardice of all political parties who, out of fear of insiders' anger, did not dare to take hold of this economic monster can now be punished. Add to this that the inflation target has not been adjusted and that the Riksbank has maintained a record low interest rate despite the recession.

The Swedish Financial Supervisory Authority's own stress tests now show that without amortization, close to 80 percent of the single residents who took out new mortgages in 2019 and who lose their jobs would be hit hard. Even if they have an a-cash, they would go minus every month if forced to repay. This explains why Finansinspektionen wants the banks to let the loans be amortization-free.

Even with the freedom of amortization, the situation is tough for the households. According to the Swedish Financial Supervisory Authority's own stress tests, 39 per cent of single-family dwellers who are new mortgage borrowers and have a cash register can receive a minus on the account each month. If they have income insurance, the group ends up at “only” 6.9 percent. It is painful reading and also explains the expansion and expansion of the a-cash.

Sambos are less vulnerable and 0.3 percent of households would suffer deficits.

The ball at the banks

The Swedes have previously been good at paying off their mortgages. Instead, we draw on something else that costs money. This leads to a deeper crisis than necessary in a Christian era. But the nightmare scenario is that if people had to sell their homes in a falling market, they couldn't afford to stay.

Therefore, Finansinspektionen is now giving the ball to the banks. How can the banks act? Yes, either they want people to repay their mortgages to reduce the risk in their mortgage portfolios, or the borrowers do not have to repay. In this way, banks' earnings are held up in the short term by a larger loan portfolio and higher interest income. The latter alternatively feels more logical at this stage.

Not only do mortgage borrowers save mortgages from having to pay off mortgages. Finansinspektionen also wants to save the banks. The banks are able to function dependent on selling housing bonds. And that market really shook when it showed that corona would also affect the Swedes and indirectly the Swedish economy.

What also worries international analysts and the Riksbank is that we do not know at household level how large savings individual households have. At the aggregate level, we see that it looks good, but there are no statistics on how much saving highly indebted households have. A qualified guess is that households that are young, have high home loans and high repayment requirements have significantly less savings than other households. Finansinspektionen now appeals to the banks to save the young. The ball is again with the banks.