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Date: 2023-06-15 

Level: Bachelor thesis in Business Administration, 15 cr 

Institution: School of Business, Society and Engineering, Mälardalen University 

Author: Andersson Haskic, Edvin

Title: Macroeconomic Consequences of Household Indebtedness: An Analysis of the Impact of Mortgages on Economic Fluctuations

Supervisor: Eriksson, Clas

Examiner: Widell, Lars

Keywords: household, indebtedness, mortgage, economic fluctuations

Research question: How do economic fluctuations affect household debt and how does household debt affect the macroeconomy? What role do credit market frictions and borrowing constraints play in this relationship? How can contagion effects contribute to systematic risk?

Purpose: To critically review and evaluate the existing literature on household indebtedness, utilizing theoretical economic models. The specific focus is on analyzing the causes and consequences of macroeconomic fluctuations on the Swedish housing market, and their impact on households and to analyze the macroeconomic implications of household indebtedness. The inverse relationship is also being analyzed.

Method: The methodology employed in conducting this paper involved a literature review, utilizing economic models and descriptive literature on the Swedish housing sector.

Conclusion: The conclusion of the analysis is that fluctuations in the economy have a significant impact on the Swedish housing market and households. Housing prices directly influence aggregate demand, leading to changes in household consumption and playing a role in financial crises and systemic risk through contagion effects. Banks' actions have implications for market stability with conditions such as wholesale funding amplifying asset prices and directly affecting housing prices.