Sweden Central Bank Governor Proposes A Novel Reform: Mortgages Should be Paid Back in One’s Lifetime

The average mortgage obligation in Sweden will not be paid back until the borrower hits age 140. The Governor of the Bank of Sweden, Stefan Ingves, has a problem with that.

Via translation from La Tribune, please consider Will Swedes Continue to Borrow for so Long?

In Sweden, it is very common for mortgage repayment to occur at such a slow pace that the life expectancy of the borrower must be 140 years on average repay their mortgage. And household debt is expected to reach 177% of disposable income by 2015.

Stefan Ingves, the Governor of the Bank of Sweden proposes to reduce the duration of mortgage debt of Swedish households from beyond their life expectancy. Such a requirement is “considered obvious in many places in the world,” Ingves stressed.

“In Sweden, approximately 40% of borrowers do not pay down mortgages at all. Among those who do, more than 40% do so in such a way that it will take 50 years or more to avoid being indebted,” he said. “We know it is not uncommon for households to have debt ratios of 600% (annual disposable income),” Ingves added.

Mike “Mish” Shedlock