Swedish change in their lending rules

Well in Switzerland the key rules at present:

- Deposit of 20% from savings (not gifts etc...)
- Monthly repayments of capital and interest not to exceed 33% of household net income

New proposals (from the banks!) being considered:
- 2/3 of capital sum to be repaid within 15 years
- Doubling of the banks capital ratio in respect of mortgage lending.

It is probably worth noting that the mortgage business usually accounts for less than 5% of a typical bank's business.
 
Jim2007 said:
Well in Switzerland the key rules at present:

- Deposit of 20% from savings (not gifts etc...)
- Monthly repayments of capital and interest not to exceed 33% of household net income

New proposals (from the banks!) being considered:
- 2/3 of capital sum to be repaid within 15 years
- Doubling of the banks capital ratio in respect of mortgage lending.

It is probably worth noting that the mortgage business usually accounts for less than 5% of a typical bank's business.
Click to expand...

The 33% rule is an interesting number.

Based on that, if you know the "average net household income" then assuming an interest rate and a loan term, you can derive a, net of deposit, selling price for a house.

The deposit does nothing to change this price.

It may create a barrier to entry but not the price, as long as supply is restricted.

During the boom, as banks extended the term for 25 to 30 to 33 and eventually to 40 years, all this fed into just driving up the, net of deposit, selling price for a house.
The builders and brokers were aware of the the banks extending the term and they adjusted the prices accordingly to make sure that the buyers were always " maxed out" on their repayments.
 
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