As house prices continue to rise, more people have begun to fear a housing bubble. Especially in the big cities. And that is why the government has matured new loan rules.
House prices continue to rise at rocket speed, and this is causing the warning lights to flash in many. Therefore, there is also broad consensus that action must be taken to avoid a new housing bubble.
Business Minister Brian Mikkelsen recently introduced a number of new rules for home loans in the country’s largest growth areas, Copenhagen and Aarhus. Precisely to avoid overly secure loans and thus unnecessary leverage of the housing market.
However, the new rules attracted massive criticism, which is why the rules have been sharpened slightly at the edges, while now they must be introduced gradually. How exactly this will work remains to be seen.
It’s the rules
The new home loan rules were intended to prevent a new housing bubble. Therefore, they also assume that mortgage lenders and banks must restrict the creation of mortgage loans that are flexible and repayable.
In practice, this means that the vast majority of homeowners will not be allowed to promise (or get new mortgage-free loans) if the home loan is more than four times the household’s annual income.
While it can in many ways prevent the housing market from being artificially maintained, it also means that it goes the hardest on first-time buyers, singles and the elderly.
And precisely for that reason, the new austerity measures have met with massive criticism. Both from other parties, the population and the Elder Case.
This is what the rules look like now
Where the first draft of the loan rules focused mainly on growth areas such as Aarhus and the capital, the customized rules are aimed at areas with the most expensive square meter prices.
That is, the rules include the most expensive owner-occupied homes, houses and apartments, or increased in value no matter where in the country they are located.
However, Brian Mikkelsen still holds on to a tighter credit rating of homeowners who have large debts and dangerous flex loans without interest and repayments.
The essential to prevent a housing bubble
That something must be done in the current housing market to avoid a new housing bubble, many agree. It is just the way it is being attacked that has led to criticism by Business Minister Brian Mikkelsen (K).
It is unfortunate that it is the young people, the single and the elderly who are primarily affected by the new rules, that does not just prevent a housing bubble, but simply change who contributes to creating it.
“It is important to prevent a new housing bubble, but we must not react to the overuse or use the wrong funds,” says Curt Liljegren, director of the Housing Economics Knowledge Center for TV 2.
Instead, he points to one key point that needs to be addressed in order to prevent the development of a new housing bubble.
“Every speculative purchase must be taken seriously. Especially project apartments, which you do not even want to move into, but just rent out, ”he explains.
– We have a strong housing market in Copenhagen, but in the future, with the new loan options, we will probably find that house prices are rising almost as fast as before.
She therefore has one prayer for Minister of Business Brian Mikkelsen’s upcoming legislative work:
– See to get things worked out and get a transparent agreement that we know when will be implemented.