Sweden’s government is set to give the green light to a proposal from the financial watchdog to tighten mortgage repayment rules despite warnings the move could deepen recent house price falls, two sources with knowledge of the discussions said on Tuesday, Reuters reported. Property prices have soared over the last couple of decades and authorities are worried debt levels are a threat to the economy, despite signs the market has now peaked. A formal decision to push ahead has not yet been taken, but two sources said the government would back the Financial Supervisory Authority’s plan to force new borrowers who take on large debts to make bigger annual repayments. “We need to do something about house prices. They cannot just keep rising,” one source with knowledge of the discussions said. Prime Minister Stefan Lofven said on Nov. 22 a decision would be made within a week. The second source said Lofven’s center-left minority coalition did not want to undermine the FSA, which was given responsibility for financial stability in 2013.
