Growing household debts worrisome

The Nordic household debt is increasing at a rapid rate. There are mainly two reasons for this, the populations capital capacity has increased and housing prices have risen. Combined with historically low interest rates, there is every incentive for increased debt situation.

Denmark is battling housing debts since the financial crisis 2008, now they managed to turn the table around slightly and the household debt/income ratio shows is finally falling, however Denmarks battle against household debts is far from over.

the neighbouring Swedish people is also one of the most indebted in the world. Now, banks have started to react. In an effort to reduce the debt burden, one introduces amortization requirements for mortgage loans. But so far there is no practice for the banks repayment requirement will be in reality.

The latest negotiations between various banking partners, broke down. Some argue that the best solution is a state law on the repayment requirement.

There are examples of how the elimination of amortization requirements, creating the kind of price increases which are taking place in housing in Sweden. When in Denmark in 2003 abolished the requirement, this led to increased household debt and soaring house prices.

Household debt % of net disposable income 2016 (2015):

When you measure the amount of household debt, you usually look at the amount of debt and the disposable income ratio. Three nordic countries show up in the top 10 household debt statistics for 2015:

  • 1.Denmark 290.3% (293%) trend -2.7%
  • 3.Norway 230% (221%) trend +9%
  • 7.Sweden 182.9% (178%) trend +4.9%
  • 13.Finland 133.8% (129%) trend +4.8%

Debt to GDP

Debt-to-GDP (GDP Ratio) is a measure between a country's government debt and its gross domestic product (GDP). This is how the Nordic countries stack up:

  • Denmark have a GDP ratio of 123.60%
  • Norway have a GDP ratio of 98.90%
  • Sweden have a GDP ratio of 84.90%
  • Finland have a GDP ratio of 63.60%