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Amortera mera

Faber, Ida and Lundberg, Michaela LU (2017) NEKH03 20171
Department of Economics
Abstract (Swedish)
Since 1st of June 2016, an amortisation requirement in Sweden applies, which means that new mortgages will be amortised to 50 percent of the value of the housing price. This was introduced when the Swedish Financial Supervisory Authority (Finansinspektionen) considered that there was a need to dampen the aggregated debt in Sweden and the purpose of the requirement was to increase household resistance in financial crisis. There is a great public interest in price developments in the housing market and the issue is constantly up to date and redundant because it concerns everyone who is in, or intends to enter the housing market.

We use a Synthetic Control Method to analyse initial effects on house prices of the amortisation requirement,... (More)
Since 1st of June 2016, an amortisation requirement in Sweden applies, which means that new mortgages will be amortised to 50 percent of the value of the housing price. This was introduced when the Swedish Financial Supervisory Authority (Finansinspektionen) considered that there was a need to dampen the aggregated debt in Sweden and the purpose of the requirement was to increase household resistance in financial crisis. There is a great public interest in price developments in the housing market and the issue is constantly up to date and redundant because it concerns everyone who is in, or intends to enter the housing market.

We use a Synthetic Control Method to analyse initial effects on house prices of the amortisation requirement, and then complemented it with statistical methods. The model means that we compare the development of house prices in real Sweden with a synthetic control group. The result shows the differences in price development in Sweden with and without an amortisation requirement.

A clear response from households was already showed in 2014, the first time the amortisation requirement was mentioned, and housing prices rose sharply. After the implementation of the reform, the initial impact on housing prices have been that they have continued to increase, but the growth rate has slowed. We explain this by means of the theory of rational expectations as well as the permanent income hypothesis.

The amortisation requirement has partially achieved its purpose since the growth rate in housing prices has decreased. Prices in the housing market have continued to increase, but at a noticeably lower rate than before. (Less)
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author
Faber, Ida and Lundberg, Michaela LU
supervisor
organization
course
NEKH03 20171
year
type
M2 - Bachelor Degree
subject
keywords
Amorteringskrav, bostadspriser, skuldsättning, finansinspektionen, bostadsmarknad
language
Swedish
id
8912965
date added to LUP
2017-07-10 15:16:32
date last changed
2018-09-26 12:23:32
@misc{8912965,
  abstract     = {Since 1st of June 2016, an amortisation requirement in Sweden applies, which means that new mortgages will be amortised to 50 percent of the value of the housing price. This was introduced when the Swedish Financial Supervisory Authority (Finansinspektionen) considered that there was a need to dampen the aggregated debt in Sweden and the purpose of the requirement was to increase household resistance in financial crisis. There is a great public interest in price developments in the housing market and the issue is constantly up to date and redundant because it concerns everyone who is in, or intends to enter the housing market.

We use a Synthetic Control Method to analyse initial effects on house prices of the amortisation requirement, and then complemented it with statistical methods. The model means that we compare the development of house prices in real Sweden with a synthetic control group. The result shows the differences in price development in Sweden with and without an amortisation requirement.

A clear response from households was already showed in 2014, the first time the amortisation requirement was mentioned, and housing prices rose sharply. After the implementation of the reform, the initial impact on housing prices have been that they have continued to increase, but the growth rate has slowed. We explain this by means of the theory of rational expectations as well as the permanent income hypothesis.

The amortisation requirement has partially achieved its purpose since the growth rate in housing prices has decreased. Prices in the housing market have continued to increase, but at a noticeably lower rate than before.},
  author       = {Faber, Ida and Lundberg, Michaela},
  keyword      = {Amorteringskrav,bostadspriser,skuldsättning,finansinspektionen,bostadsmarknad},
  language     = {swe},
  note         = {Student Paper},
  title        = {Amortera mera},
  year         = {2017},
}