By Dow Jones Business News,
June 13, 2014, 04:27:00 AM EDT
By Sven Grundberg
STOCKHOLM--Rising house prices and extended household credit is a mounting concern for Sweden's financial stability,
the International Monetary Fund said in a review of the Nordic nation's economy on Friday.
"Recent data indicate that household debt ratios are high across all income groups, but particularly so for indebted
lower-income households who are especially vulnerable to income, interest rate, and house price shocks," the Washington-
based institution said.
As a consequence, it added, a large and sudden drop in house prices could hit consumption, employment and growth, and
ultimately impact the banking system.
The IMF trimmed its economic growth outlook for Sweden this year, and said it is likely to settle at 2.6%, down from
its previous estimate of 2.8%. The institution raised its growth estimate for 2015 to 2.7% from 2.6%.
In light of growing household indebtedness, the IMF called for Swedish policy makers to introduce "a comprehensive set
of macroprudential actions" to help steer mortgage credit demand "towards a sustainable path." It suggested binding
maximum amortization periods for new mortgages and a further reduction of Sweden's loan-to-value cap, as possible
Sweden's economy has performed well relative to many other European economies since the financial crisis, the IMF said
in its review. But it noted that unemployment has been higher than expected, especially among young people, the low-
skilled and immigrants.
Jens Hansegard contributed to this article.
Write to Sven Grundberg at email@example.com; Twitter: @svengrundberg
(END) Dow Jones Newswires
Copyright (c) 2014 Dow Jones & Company, Inc.