Abstract: A Residential Mortgage Market in Crisis: Something to Learn from the Swedish Case

Frida Östman

Abstract

In the early 1990s Sweden experienced its most severe financial crisis of modern times. Because this economic crisis originated in the real estate market, Sweden's management of the event often has been brought forth in comparison to and as a pattern for the solution of the subprime crisis. And there is a lot to learn from the Swedish case. But often in the discussion comparing the two, some important regulatory differences are forgotten. Regulations on the Swedish residential mortgage market were able to protect it from some of the effects of the crisis. In this essay the credit risk in the Swedish residential mortgage market for self-contained or semi-contained housing will be discussed, and a short comparison will be made between the Swedish and the American residential mortgage markets. The aim is to elucidate some features of the Swedish residential mortgage market that make it a more stable market than the American market.

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