10  6  One quarter of the total debts are in the County of Stockholm, one sixth in the County of Västra Götaland, one seventh in the County of Skåne and one third in the rest of the country. BIS central bankers’ speeches  Chart 4. Debt ratios for households with mortgages in different municipalities Per cent 500 450 400 350 300 250 200 150 100 50 0 Stockholm  Gothenburg  Malmö  Others  Source: The Riksbank  Young people are most highly indebted, but older people also have high debt ratios I would also like to take this opportunity to say something about how the debts are distributed per age group. It is sometimes claimed that it is mostly younger people that are highly indebted. This is also confirmed by the Riksbank’s credit data. However, we also note that indebtedness is actually rather high in the older age groups (see Chart 5). In other words it is not only “young yuppies in central Stockholm” that have large debts but also their grandparents living in small towns and villages in other parts of the country. Chart 5.
Considering the dramatic price increases on the Swedish housing market in recent years, this is a completely reasonable claim. The higher housing prices are, the greater the loan required to finance the purchase of a house or flat. Finansinspektionen’s mortgage survey shows that the debt ratio for new mortgage borrowers averages 370 per cent, which is a higher debt ratio than for existing mortgage holders. On the other hand, I do not think that the difference between new mortgage borrowers and those who have owned their homes for some time is as big as I had perhaps expected. This is because people who have owned their homes for a while have had the opportunity to reduce their debts. The fact that the difference is not bigger could indicate that the households reduce their debts at a relatively slow rate. Let me return to this a little later. The debt ratio is highest among low and middle-income earners One conclusion of the government’s inquiry “Over-indebtedness in a credit society” is that the highest debt ratios are to be found among those with the highest incomes. This is the picture you get if you look at the population as a whole, that is if you also include individuals who have an income but no debts. This means that the inquiry really shows that low-income earners do not take loans to the same extent as high-income earners. If we instead look at debts in relation to incomes only for those individuals who have debts we get a different picture.