Re:Why northern Europe is so indebted
by bjornsing on Wednesday March 03, 2021 @04:58AM
(#26326520)
It’s more or less the same in Sweden.
Another important difference compared to the US is that in Sweden you are more or less the bank’s serf. In many US states the home itself is the bank’s only collateral, and the homeowner can “walk away” if its value falls below the mortgage. In Sweden the bank can take everything you own, and even extract a share of your future earnings. Also there is no (quick) personal bankruptcy, only a slow process that takes years and where you have to show that you’ve payed as much as you possibly can. This lowers the bank’s risk and brings interest rates down. In Sweden you pay about 1-2% interest on a mortgage. In Denmark I think you can even get zero rate mortgages. This in turn of course incentives borrowing, since many people just look at the monthly cost of a home.
Another important difference compared to the US is that in Sweden you are more or less the bank’s serf. In many US states the home itself is the bank’s only collateral, and the homeowner can “walk away” if its value falls below the mortgage. In Sweden the bank can take everything you own, and even extract a share of your future earnings. Also there is no (quick) personal bankruptcy, only a slow process that takes years and where you have to show that you’ve payed as much as you possibly can. This lowers the bank’s risk and brings interest rates down. In Sweden you pay about 1-2% interest on a mortgage. In Denmark I think you can even get zero rate mortgages. This in turn of course incentives borrowing, since many people just look at the monthly cost of a home.