STOCKHOLM (Reuters) - A Swedish court on Monday rejected the government's proposal to force homeowners to pay off mortgage principal in a setback to its efforts to rein in household debt in Sweden.
Sweden has one of Europe's strongest growth rates but that is accompanied by concerns about a housing bubble and one of the region's highest levels of household debt, and the central bank has urged regulators to tighten rules for banks and borrowers.
The Swedish Administrative Court of Appeal said it did not think the Swedish Financial Supervisory Authority (FSA) should be given the right to impose such measures on individual households and was not sure that could be enforced in any case.
The court, whose decision was a non-binding opinion and not a legal ruling, also said that such a mandate might violate the constitution. It has rejected a simliar proposal once before and its decision may slow down any measures passed by parliament.
"This is a complicated question which demands a much more thorough investigation than has been presented so far," it said.
The Finance Ministry said in a written comment to Reuters that it would await opinions from other state bodies before putting the proposal before parliament.
"We will handle this in the usual manner when new law is introduced in Sweden," Financial Markets Minister Per Bolund said. "We have the legal grounds for this proposal but we will of course listen to all bodies' opinion."