(Adds chief economist quotes, rewrites)
STOCKHOLM, April 6 The risk of a fall in Swedish
house prices is higher than normal and many households are
highly leveraged, the country's financial watchdog warned as it
presented its annual survey of the mortgage market on Thursday.
Swedish house prices have sky-rocketed over the last two
decades, fuelled by lower interest rates, generous tax breaks
and low levels of building and the watchdog has long flagged
that the surge is unsustainable.
"The combination of extremely low interest rates, strong
growth and very high house prices can and will eventually
reverse into something different and we need to ensure that
Swedish households are prepared for that," said Henrik
Braconier, chief economist at the Swedish Financial Supervisory
The watchdog has introduced several measures over the past
couple of years to stem the soaring mortgage lending. In 2016,
it made it mandatory for highly leveraged new borrowers to pay
down the part of the principal on mortgage loans.
"It has had a dampening effect on household debt," Braconier
said, adding that new mortgage takers were borrowing less and
were buying cheaper properties.
He said the watchdog would get back in the coming months
with additional measures if needed.
At the same time, he said the households did not currently
pose a big threat to financial stability in the Nordic country
as they on average had sufficient margins while banks were well
(Reporting by Johan Ahlander; editing by Niklas Pollard)