Sweden’s new rules forcing homeowners to make bigger mortgage repayments were introduced to cool the rising property market. The changes introduced by the Swedish Financial Supervisory Authority (FSA) stated that all new mortgages that were 50% LTV or higher must be repayment mortgages – down from the previous rule of 70% LTV.

However, estate agents claimed that the new rules would simply stop homeowners from moving as much as most would be forced to change from an interest only mortgage to a repayment mortgage.

The FSA, which is aiming to constrain record household debt in the country and soaring property prices, forecast that the change could cause values to drop by as much as 5%.

However, the changes are not slowing price rises, which are fundamentally being caused by a lack of new construction and, according to data from Hemnet, the largest online property listings site in Sweden, the number of properties on the market is down by 20-25% on a year ago and is at its lowest level since 2008.

In the year to October, apartment prices increased by 6% and house prices rose by 8%. However, in cities like Stockholm, prices increased by more than 10% over the past 12 months.