Sveriges Riksbank published its consultation response to the memorandum on developing Sweden’s macroprudential framework, broadly backing the direction of the proposals. It supports moving responsibility for setting the countercyclical capital buffer rate to the Riksbank and argues the borrower-based toolbox should be expanded with an income-based instrument through a statutory loan-to-income limit. The response highlights the countercyclical buffer’s role as a cyclical tool that should be reduced in severe shocks, noting its interaction with the Riksbank’s crisis liquidity support measures and the implications of Finansinspektionen’s “positive neutral” application of the buffer at 2 per cent. For borrower-based measures, it supports placing amortisation requirements and loan-to-value (LTV) limits in a new law, retaining the first amortisation requirement, abolishing the stricter amortisation requirement, and recalibrating the LTV limit to 90 per cent for home purchases alongside an 80 per cent limit for home equity withdrawals. It also backs a five-year “inertia rule” for property revaluations and the proposal for the Government to be able to temporarily tighten the LTV limit and exempt loans from amortisation requirements in extraordinary circumstances, while warning that legislation can slow needed action and calling for sufficient flexibility to deploy additional borrower-based measures. To address the removal of the stricter amortisation requirement, the Riksbank points to a loan-to-income cap in line with the household debt inquiry’s proposal, describing a ceiling of 550 per cent of gross income with a 10 per cent flexibility ratio. The Riksbank also stresses the need for prudential authorities to have the conditions to collect and analyse relevant data, particularly on households, to support timely risk communication to the Government and Parliament. It supports making the Governor of the Riksbank a voting member of the European Systemic Risk Board’s General Board and notes that it is unclear whether the proposed changes affect which Swedish macroprudential body should be notified to the ESRB.
Riksbank 2025-10-16
Sveriges Riksbank endorses taking over countercyclical buffer rate setting and urges government to introduce a loan-to-income limit
Sveriges Riksbank supports shifting countercyclical capital buffer rate responsibility to itself and advocates for a statutory loan-to-income limit. It endorses new legislation for amortisation requirements and loan-to-value limits, emphasizing flexibility in borrower-based measures. The Riksbank highlights the importance of data collection for timely risk communication and supports the Governor's voting membership in the European Systemic Risk Board's General Board.