Debt must be measured against repayment capacity The current loan-to-value cap on housing loans urgently needs to be accompanied by a new, more comprehensive cap on debt. This would take into account all a loan applicant’s debt relative to their income. Share Email Twitter Facebook Linkedin Google+
The highly indebted cut spending as the economy slows The more debt households take on during an economic upswing, the more likely they are to cut consumption when the economy begins to run out of steam. Share Email Twitter Facebook Linkedin Google+
Capping debt-to-income ratios complementary to housing loan cap The indebtedness of Finnish households relative to income has grown considerably since the turn of the millennium. A proportion of new residential mortgage holders have a heavy debt burden relative to their income. Share Email Twitter Facebook Linkedin Google+
New methods needed to rein in consumer credit Consumer credit can drive households into financial difficulties. New measures are needed to prevent increasing debt problems. Share Email Twitter Facebook Linkedin Google+
Household debt burden worryingly large – we must take a variety of measures to guard against the risks The accessible summary sums up the solutions presented in the Bank of Finland’s stability assessment that can get a grip on households’ excessive debt levels. Share Email Twitter Facebook Linkedin Google+
Are Finns living beyond their means? Finns have consumed at levels above their incomes, accumulating more debt than new wealth. Household saving is nevertheless similar to that of the other Nordic countries. Share Email Twitter Facebook Linkedin Google+
Debt risks amplified by housing company loans The macroprudential toolkit needs to be replenished with borrower-based instruments that take into account loan applicants’ repayment ability and are able to curtail household indebtedness as a whole. Share Email Twitter Facebook Linkedin Google+
Repricing of securities markets’ risk premia still most significant threat to global financial stability Low risk premia and high valuations have increased global securities markets’ exposure to price corrections and abrupt shifts in risk premia. Share Email Twitter Facebook Linkedin Google+