The Swedish Financial Supervisory Authority has notified the European Commission and the European Systemic Risk Board that it intends to extend the current risk-weight floor for Swedish mortgage exposures for two years from 31 December 2025, and to extend the current risk-weight floor for Swedish commercial real estate exposures for two years from 30 September 2025. The extensions would be taken under Article 458 of the Capital Requirements Regulation. For mortgages, the measure maintains a 25% risk-weight floor introduced in 2018 in response to Swedish banks’ high exposure to the domestic housing market and the risk that internal ratings-based models may understate capital needs after a prolonged period of low mortgage losses. For commercial real estate, the extensions would maintain risk-weight floors introduced in 2023 of 35% for Swedish commercial property exposures and 25% for Swedish commercial residential property exposures, reflecting continued concerns about the sector’s size, cyclicality, high leverage and close links to the financial system, as well as banks’ large exposures and the potential for credit losses.
Finansinspektionen 2025-04-30
Swedish Financial Supervisory Authority notifies EU of two-year extensions to risk-weight floors for mortgages and commercial property exposures
The Swedish Financial Supervisory Authority plans to extend the risk-weight floors for Swedish mortgage and commercial real estate exposures for two years under Article 458 of the Capital Requirements Regulation. The mortgage risk-weight floor remains at 25%, addressing concerns over banks' high domestic housing market exposure. For commercial real estate, the floors are 35% for property and 25% for residential property, reflecting ongoing sector risks and potential credit losses.