Sweden will limit mortgage loan amounts to 85 percent of a property's value in a move to avoid irresponsible lending and forced forclosures, the country's financial supervisory authority (FI) said.

• Swedish banks top forecast

The new rule, which implies that borrowers will need to put down at least 15 percent of a home's value before being granted a mortgage, was to enter into force on October 2010, the authority said in a statement.

"The purpose of the general guidelines is to stem an unsound trend in the credit market where credit institutions would use ever-increasing loan-to-value ratios to compete," it explained.

Swedish banks "set their own ceilings themselves, often at 80 or 90 percent (of a property's value), but so far there was no regulation on the ratios," FI's chief economist Lars Frisell told AFP, adding FI had "the authority to issue these kind of rules."

Frisell however conceded the guidelines were "not a law, or a binding regulation, because the banks can have alternative ways of achieving their goals."

The money for the 15 remaining percent could for instance "come from another loan, as long as it's guaranteed by something other than the property," he pointed out.

Sweden is not planning to change its variable-rate mortgage system, which acoording to FI's investigations, is well managed by the banks.

The global economic crisis emerged from a financial storm created by a mortgage crisis in the United States, itself triggered by so-called "subprime" variable-rate mortgages given to people with poor credit ratings.

Hundreds of thousands of Americans lost their homes due to foreclosures.