Sweden's Financial Supervisory Authority is considering capping mortgages relative to households' disposable income as a way to cool down a red-hot housing market, its director general said last week. High and rapidly rising levels of household debt levels in the Nordic country have worried many, including the central bank. Newly appointed FSA chief Erik Thedeen said authorities needed to act now and be ready to do more if needed. “One measure close at hand if the FSA would need to take further action is to introduce a so called debt-to-income cap, a limit on how much a bank is allowed to lend in relation to the borrower's income,” Thedeen wrote in an article published in the daily Dagens Nyheter. Debt levels could be capped at around 600 per cent of a household's disposable income for new loans, with some exceptions, Thedeen said, but added that the exact levels would need to be investigated further. Another possibility was to regulate how big a part of the income a household is allowed to spend on interest and amortisation on mortgages, he wrote. Authorities in Sweden are worried about a bubble in the housing market which could derail the AAA-rated economy. Former Finance Minister Anders Borg called on the government and FSA to successively introduce new measures until house prices stabilised or started to fall. House prices have tripled over the last 20 years, and quadrupled in the capital. Mortgage borrowing rose at its fastest pace in more than four years in September, fuelled by negative interest rates as the central bank fights fears of deflation. The government plans to introduce tighter mortgage rules, but the measure has hit legal difficulties and is likely to be delayed. It introduced a cap on loans of 85 per cent of the purchase price of a house in 2010.