House price surge swells mortgage books at Swedish banks
The country’s three largest banks recorded close to 20% growth in mortgages last year.
Total mortgages on the books of Sweden’s leading banks rose sharply last year on the back of surging house prices, as the work-from-home trend and low interest rates drove demand.
The country’s largest bank, Svenska Handelsbanken, saw an 18.8% rise in mortgages on its books in 2020, increasing to $147bn, while rivals Swedbank and SEB Group also posted increases of around 18% to $115bn and $70bn, respectively, according to The Banker Database.
Länsförsäkringar Bank, the fourth-largest bank by total assets, posted a 22.5% increase in mortgages on its books to $32bn.
Average home prices in Sweden were 7.5% higher in 2020 than in 2019, according to Nordea.
Residential and commercial real estate loans stood at about 54% of total bank lending at the end of 2020, and this sizeable exposure could present risks in the future, according to S&P Global.
“While government measures, social security support and the low interest rate environment should support asset quality, a change in demand for retail and office space could pose risks for commercial and residential real estate loans,” says Olivia Fleischmann Grant, an analyst at S&P Global.
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