FI’s View on Preconditions for Mortgage-Based Business Activities

In Sweden, the traditional bank-based financing model for issuing and financing mortgages is currently being supplemented by models where mortgages are being financed in new ways, e.g. alternative investment funds (AIF).

New methods for financing mortgages can be utilised by both banks and newcomers to the mortgage market. Greater competition and new, sound financing models for mortgages are fundamentally positive. However, thiese developemnts should not occur at the expense of consumer interests and stability that the regulations aim to protect and that FI, as a supervisory authority, is tasked with monitoring.

On 5 July 2018, FI published a memorandum that outlined several of the preconditions that newcomers to the mortgage market needed to meet to avoid elevated risks for individual consumers or the financial system. FI has updated this memorandum and further developed its view on several preconditions that reduce risks in the operations of all mortgage providers in general and banks in particular.

FI will place special emphasis on these preconditions when assessing applications for authorisation and in its supervision of participants in the mortgage market.