Swedish banks braced for home loan capital hike

Swedish regulators believe risk weights for mortgages at the country’s big four lenders are too low, and are due to announce a mechanical fix – possibly a combination of floors and multipliers. Banks are worried about the incentives that creates. By Michael Watt


Sweden's banking industry could be forced to almost triple the risk weights it assigns to mortgage loan portfolios under a set of proposals due from Finansinpektionen, the country’s prudential supervisor, in early July. It is the latest example of a regulator applying brute force to internal models, and prompts an equally forceful response from one Swedish mortgage banker. “We’re annoyed about this, so upset and so annoyed. It’s outrageous,” he says (see pages 16–20).

Mortgage risk weights

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