Sweden ABS Market Outlook

the sweden abs market has been growing steadily over the years, and the outlook for the next fourteen years looks positive. the swedish residential mortgage market continues to offer favourable conditions for abs issuance, with low interest rates and a steady demand for mortgages. the swedish mortgage market board (smqb) estimates that the total loan volume in the secured consumer loan market, multi-dwelling loan markets and the mortgage loan market in sweden as of the end of 2018 will be around sek 1,726 billion. it is believed this will grow to sek 2,243 billion in 2032 at an average real rate of 1.5%. the housing prices in sweden are expected to remain relatively stable in the foreseeable future, with the average national house price estimated at sek 4 million at the end of 2018 and expected to increase to sek 5 million by 2032. this would provide a good base for the continued strength and stability of the swedish abs market. the mortgage market also offers attractive coupon rates for swedish residential mortgage-backed securities, which should help to maintain the demand for these instruments over the next 14-year period. the availability of additional capital relief through securitization also provides benefits to lenders looking to maintain their capital reserves. banks are able to securitize their mortgage loans, while retaining a portion of the securitized asset in order to meet their capital requirements. this is particularly attractive to smaller banks, since it allows them to have access to larger volumes of capital. there are, however, risks to investing in the swedish abs market. mortgages are subject to prepayment risk, and investors should be mindful of this risk when considering the potential return on their investments. in addition, the market is heavily reliant on continuous refinancing of existing mortgages, which may be negatively impacted by an economic downturn. overall, the outlook for the swedish abs market over the next fourteen years is positive, with indicators pointing to continued strong demand for securitized investments. banks offering swedish residential mortgage-backed securities should benefit from attractive coupon rates, while securitization should help them retain their capital reserves. investors should, however, be mindful of potential risks when considering investments in swedish abs instruments.