The risks relating to high household indebtedness are realised when indebted households respond to the threat of payment difficulties by sharply reducing their consumption.

Sweden's economy is performing well. However, if it were to deepen, the downward turn in house prices could cut the positive trend in the economy.

There are no immediate threats to the stability of the Finnish financial system. The relocation of Nordea’s corporate headquarters will, however, increase the banking sector’s exposure to structural vulnerabilities.

The economic upswing in Finland has strengthened, bolstered by the improved performance of exports. Despite the improved growth, Finland’s external indebtedness will continue to grow. GDP is forecast to grow 2.1% in 2017, 1.7% in 2018 and 1.4% in 2019.

Households in both Finland and Sweden are carrying a record level of debt relative to their income.

Structural changes in the banking sector may have an impact on risk spillovers between the Nordic countries.

A range of instruments could be deployed to restrain dangerous growth in lending for house purchase and household debt.

The European Systemic Risk Board (ESRB) has issued a warning to Finland concerning the vulnerabilities related to household indebtedness and lending for house purchase. There are, however, no threats to the stability of the Finnish financial system in the short term.