STOCK MARKET WATCH -- Monday, 8 September 2014

[xchrom]

38. Sweden Opposition Backs Lower Rates as Indebtedness Grows

http://www.bloomberg.com/news/2014-09-08/sweden-opposition-backs-lower-rates-as-indebtedness-grows.html

Sweden’s Social Democrats are heading for a national election victory backed by housing plans that could dig the country deeper into debt.

Magdalena Andersson, the party’s economic spokeswoman and the likely finance minister if the Social Democrat-led opposition prevails in this month’s election, has proposed using state-owned bank SBAB to bring down mortgage rates, already at four-year lows, to make housing more affordable. Andersson, whose party would boost spending on health care and education as well as housing, also suggested relaxing some rules designed to stem the growth in household debt, which is at an all-time high.

The Social Democrats’ embrace of the welfare state has helped it keep a lead over the center-right ruling coalition in polls. With Sweden suffering from a shortage of homes and soaring prices, the country’s banking industry, current government, and analysts say the proposals to further open the mortgage spigot threaten Sweden’s financial stability.

“We see the risk in the housing market from house prices continuing to go up,” said Lee Tyrrell-Hendry, macro credit analyst at Royal Bank of Scotland Plc in London. “Any proposals that encourage people to borrow more, take on more debt and encourage more of a boom in the housing market are in some ways retrograde steps.”