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DN Debate. Removing interest deductibility stops home loans to many young

the Swedish financial supervisory authority and the Riksbank has proposed to ränteavdragen should be reviewed to reduce the risks associated with household indebtedness. The governor has said that, in practice, they should be capable of being liquidated rapidly and completely when the rate is as low as it is now. The issue is also top of the political agenda.

In an article in DN Debate I argued for structural and public-financial reasons, can possibly speak to reduce the ränteavdragen. In contrast to the arguments to make it of financial resiliency is weak and that it is also essential to analyse the consequences; not the least for housing prices, then, no interest deductions, theoretically, would be able to give a bostadsprisfall on the whole 30%. It would in such a case, in the short term, contribute to the very problem that the measure is supposed to prevent in the longer term.

An equally important question is what it would mean for households ' opportunities to be able to buy a home. The question is absolutely crucial to take into account when it is many years of queuing for rental properties in the areas with the greatest housing shortage and many people mistreated in the secondary market.

in Order to be granted a mortgage loan to a household to cope with a rise in interest rates to around 7 per cent but to get the deficit in its boendekostnadskalkyl. It is the interest rate the financial supervisory authority uses in its stress tests in the annual Bolåneundersökningen and about the level at which most banks use in the assessment of creditworthiness. On the level of interest rates is, of course, ränteavdragen crucial, even if the interest rate is currently low.

Absolutely no interest deductibility leads to falling house prices. If they removed ränteavdragen beats through the whole can housing prices drop by 30 per cent.

In Bolåneundersökningen ask the financial supervisory authority, the banks how large a share of the bolånetagarna that would have got a deficit in its boendekostnadskalkyl if no interest deductions would have been made, based on disbursed loans during the 12-day period the survey covers. These figures are published, however, not in the Bolånerapporten and the period examined is also very limited. I have, therefore, with the help of the data over the approximately 70 000 paid to the mortgage loan at SBAB in the years 2017 and 2018, and the analysis made by SBAB's riskenhet looked closely at this issue.

the Corresponding figure for 2018 is just under 13 000. Measured as the proportion of households that would be in deficit in its boendekostnadskalkyl it is on par with the numbers we supplied to the Bolåneundersökningen. The figures do not show that these households would not have had any mortgage if they had bought a cheaper home, but that very many households without the interest deductions would not have received the loans actually granted and got paid in 2017 and 2018.

There are reasons to believe that young households and single parent families would be hit especially hard by the removed interest deductions. We have therefore calculated how the removed interest deductions would hit specifically for these groups. The results show that 48 per cent of all households with just one borrower then had not been granted the mortgage they got in by 2017-2018. The proportion of ensamlåntagare amounts to approximately 35 per cent of all borrowers.

In the age groups 18-24 years and 25-29 years, the corresponding figures are 54% and 50%. These age groups constitute about 15 percent of all borrowers.

the Results may differ slightly between different banks depending on exactly how the clientele looks but a generalization of these results reveals that about one third of all households and about half of young households and households with only a borrower who took mortgage loans in 2017 and 2018 had not been granted to these mortgage loans if ränteavdragen had not been available.

If the removed ränteavdragen beats through the whole can housing prices drop by 30 per cent. If this happens, the monthly payment will not increase for new home buyers, and then getting the results above misleading for those households who purchase a home after ränteavdragen has been eliminated. But they are still valid for those households that granted the mortgage loan just before ränteavdragen would be abolished.

If absolutely no interest deductions would lead to such a large bostadsprisfall as 30 per cent, it would therefore not be a problem for new home buyers. However, it would give rise to another major problem. Leverage, i.e. debt in relation to the value of the house, would increase significantly for those who have just taken a mortgage loan, but also in the housing stock as a whole. In the latest Bolånerapporten notes the Swedish financial supervisory authority to value ratio increased in 2018 on the basis that house prices fell more than debt reduction. A quick and total lifting of ränteavdragen would greatly add to the problem, at least in the stock of housing loans.

Thus they stand as advocates to ränteavdragen shall be abolished by the financial resiliency faced with a dilemma. How removed the interest deductions strikes on housing prices is an empirical question. With a small impact on house prices of no interest deductions would very many households that today are granted mortgages not be granted to these mortgage loans if ränteavdragen would be abolished. The households affected hårdas of this is in addition to those already in the day limited by the ceiling on mortgages and amorteringskravet. With a large impact on housing prices, this problem would be much less but at the same time could leverage to increase markedly for the households that have just taken a mortgage loan, and for the stock as a whole. It would in the near future pose a far greater problem for the financial stability in Sweden than the problems of today's interest deductions claimed to be.

But also that it appears the way in which no interest deductions will actually contribute to a reduction in risks for financial stability, with particular regard to the problems I pointed here.

Under all circumstances speak the risk of large bostadsprisfall, alternatively significant difficulties for younger households and single people to be able to take mortgages, to ränteavdragen must be tapered off very slowly – if they are now to be scaled down.

That households ' borrowing with property as security in order to have somewhere to live may not be the biggest problem. A reasonably major problem is that the loans without a home as collateral has increased substantially in the last few years and now amounts to close to 20 per cent of households ' total liabilities. A more urgent first step would therefore be to de-escalate the ränteavdragen on these loans, even if to some extent it would also turn against those who borrow for down payment on home purchases.

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