An extensive materialisation of risks on the Swedish housing market could also have notable effects in the other Nordic countries.

Low risk premia and high valuations have increased global securities markets’ exposure to price corrections and abrupt shifts in risk premia.

Housing debt has grown, both in absolute terms and relative to income, especially in growth centres, where housing is more expensive and subject to greater pressures from demand than elsewhere.

When indebted households cut their spending during an economic downturn, this also increase the financial difficulties of non-financial corporations.

House prices in the Helsinki Metropolitan Area have long been rising faster than in the rest of Finland. Developments have been influenced by regulatory controls and the low interest rates on housing loans.

Mortgage lending can be reined in by setting higher risk weights for loans. There are, however, differences in calculation methods. Harmonisation would enhance a level playing field between banks.

Housing debt is concentrated in the Helsinki metropolitan area and other growth centres, where housing is more expensive. A large proportion of loans is borne by a small proportion of households.

The authorities should be equipped with new tools for ensuring the banking sector’s capital adequacy and preventing overheating on the housing market.