Swedish household credit growth was little changed in January after four central bank interest rate cuts in a year sent household debt to new highs.
Household borrowing growth was an annual 4.5 percent in January, Stockholm-based Statistics Sweden said in a statement today. That was in line with a median estimate in a survey.
The pace of debt growth has slowed for almost seven years since peaking at 13.2 percent in March 2006. Sweden’s central bank Governor Stefan Ingves, in the minutes from the latest rate meeting on Feb. 12, warned that low interest rates risk feeding imbalances as household debt levels have risen to records. The bank kept rates unchanged at 1 percent this month, after in December cutting rates for a fourth time in a year to support economic growth.
Sweden’s financial watchdog in 2010 put a cap on mortgage borrowing to stem household debt, which has risen to a record 173 percent of disposable incomes from 90 percent in 1996. It last year also proposed tripling the so-called risk weights on mortgage loans.
To contact the editor responsible for this story Jonas Bergman in Oslo at firstname.lastname@example.org