Decision of the Board of the Financial Supervisory Authority on the application of a minimum risk weight for Swedish residential mortgage loans
At its meeting on 22 February 2022, the Board of the Financial Supervisory Authority (FIN-FSA) decided to recognise, pursuant to Article 458 of the Capital Requirements Regulation (CRR, 575/2013), the average minimum risk weight of 25% for residential mortgage loans granted by credit institutions using the Internal Ratings Based (IRB) approach adopted by the Swedish Finansinspektionen on 16 December 2021 and valid from 31 December 2021. The FIN-FSA’s decision will apply to individual credit institutions registered in Finland with a residential mortgage loan stock in Sweden exceeding SEK 5 billion.
On 16 December 2021, the Swedish competent authority, Finansinspektionen, decided to keep in force its decision of 22 August 2018 on an average minimum risk weight of 25% for residential mortgage loans granted by credit institutions using the IRB approach. The decision had already been renewed once, on 15 December 2020. The decision taken now came into effect on 31 December 2021 and will remain in force until 30 December 2023.
The measure is based on Article 458 of the CRR, which provides that the competent authority may introduce higher risk weights for targeting asset price bubbles in the real estate sector to mitigate macroprudential risks in the financial system. The minimum risk weight imposed by Finansinspektionen is institution-specific and applies to retail exposures in Sweden secured by immovable property.
For further information, please contact
Peik Granlund, Senior Macroprudential Advisor, telephone +358 9 183 5236 or peik.granlund(at)fiva.fi