Below you will find a brief summary of some selected economic events per week and how these affect your personal finances. This way, you can quickly get a picture of the external situation and feel more secure in how to manage your personal finances.
It is increasingly difficult for young people to enter the housing market
A report from HSB shows that the opportunity for young adults to buy their own home has deteriorated significantly over the past three years. A calculation example shows that it is impossible for a 23-year-old at home to cope with the banks’ “left to live” calculations in 12 of 20 major municipalities. The survey also shows that the 23-year-old is forced to take unsecured loans (mortgage loans) in excess of USD 100,000 in 16 of 20 municipalities in order to reach the cash contribution of 15 percent. In 2005, they only needed to do it in one municipality.
Manuel’s comments: Young people are facing major challenges in entering the housing market and the situation does not appear to be brightening in the near future. The latest regulations have been made to reduce household indebtedness, which is basically very healthy. At the same time, these regulations strike harder for certain groups, for example for those who want to enter the housing market. I think there is the will – both in the market and in decision makers – to solve these challenges, but we can probably expect that it will take some time.
The world’s debt mountain is growing
If we knock out the world’s debt on the world’s population, we get a debt of USD 311,000 per person. All government, private and corporate loans have been included. Debt in the world has grown greatly since the financial crisis, which is because many countries have stimulated the economy with low interest rates, among other things.
Manuel’s comments: The picture of the world’s total debt needs to be nuanced. If we look at each country, the debt is incredibly different. The United States is at the top with a government debt of $ 22,000, which is over 100 percent of its GDP. In Sweden, we talk about surplus targets and have reduced the government debt significantly in recent years. When we look at private individuals, the Swedes, on the other hand, have relatively large debts, in international comparison. This is partly due to the fact that interest rates have been falling for a long time, while housing prices have skyrocketed. I think you should think about how your costs for the loans would be affected by a rate hike. Try to keep the loans down and repay instead more now, while the interest rate is as low as it is.
The rent can rise by 3.5 percent
The property owners’ industry organization wants to raise rents by 3.5 percent next year. They justify the desired increase because the rent is the landlord’s only income and that it must be increased as much as other income in the community. In 2019 rents were increased by an average of 1.9 per cent.
Manuel’s comments: It is reasonable for rents to increase as other prices in society rise. Still, I personally think that 3.5 percent is high, considering inflation has been around 2 percent lately. Expect a rent increase, but I have a hard time believing 3.5 percent will be a reality.