Effekter på bostadsmarknaden av stabiliseringspolitiska åtgärder
Sammanfattning: A current topic in Swedish politics is the increasing household debt, particularly in the metropolitan areas. The Swedish Central Bank and the Financial Supervisory Authority have made proposals for several policies, to inhibit a continued growth of the household debt. These policies include introducing amortization requirements, a debt-to-income ratio limit and reduced home mortgage interest deductions. The growth of the Swedish household debt is mainly attributed to the lower cost of mortgages, a result of low interest rates. This paper examines why it is considered necessary to regulate household debt as well as which stabilization policy that should be best suited for this. The policies examined are the various forms of amortization requirements, debt-to-income ratio limits, reduced home mortgage interest deduction as well as different measures relating to the property tax and the capital gains tax. Households with high debt-to-income and loan-to-value ratios have empirically proven to prolong and exacerbate economic recessions, since they are forced to cut back on their spending during economic disruptions to afford their loans. In this case, many individuals’ personal choices affect the greater economic system, and therefore makes up an externality. Individuals are also protected against the risk of too much debt, because of an extensive social security system as well as the interest deduction, which leads to moral hazard. The lending behaviour of the banks are a type of externality as well. Banks have no incentive to get their mortgage customers to amortize because it is more beneficial for the bank if their customers have other types of saving vehicles. This leads to an adverse selection of saving vehicles. Furthermore, there may be a moral hazard behaviour of banks that are too big to fail. Neither amortization requirements nor debt-to-income ratio limits solves the actual reason for the increased household indebtedness. An amortization requirement will not have any greater effect. Furthermore, the temporary exceptions for households with economic setbacks are somewhat similar to subprime loans. A debt-to-income ratio limit is the policy that should be the most effective to reduce household debt growth. It could however have a negative impact on residential mobility and cause a decline in housing prices. A reduced home mortgage interest deduction should be the most effective policy to internalize the externalities that are an effect of household indebtedness behaviour. The removal of the “interest rebate” should reduce the demand for mortgage loans by eliminating the moral hazard behaviour. The home mortgage interest deduction should be reduced while interest rates are still low. It could be reduced gradually over a longer time period. A tax shift with a reduced capital gains tax could undo the decreased residential mobility caused by the property tax reform of 2007.
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