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Finanstilsynet’s recommendation for credit regulations implies a tightening of the current rules.
The Authority’s recommendations were announced Monday morning and are an important part of the finance ministry’s decision basis when assessing whether and in what form the regulations will continue when they expire at the end of the year.
Mortgages in particular will tighten if Finanstilsynet gets what it wants. It recommends that the maximum limit for the total debt of the borrower be reduced by ten percent, from five to 4.5 times the gross annual income, and that the flexibility fee of the banks be reduced by half.
Today, banks can deviate from customer serviceability and loan-to-value requirements for ten percent of the population (with the exception of Oslo, where the fee is eight percent), but it is proposed to reduce it to five percent.
The reason for wanting to adjust is the historically high level of debt in the population:
“High levels of household debt pose a significant risk of financial instability,” the audit writes in a press release.
You will include auto and boat loans in the calculation.
“There is a danger that the indebtedness ratio will rise in the coming years and that many households will take out large loans, partly because interest rates are so low and high house prices give many households the opportunity to borrow. additional mortgages “. write more supervision.
In addition to tightening mortgages, it is recommended that regulations extend to borrowers with collateral in other places than homes, such as cars, boats, etc. This constitutes a small part of the total debt, but:
“These loans, which the borrower often has alongside other debts, however, can contribute significant risk to vulnerable households and therefore also have an impact on financial stability,” writes Finanstilsynet.
Also, it is recommended that a flexibility fee not be granted for other types of loans than for housing.
Increased flexibility
The flexibility of banks has been even greater during the crown crisis, as a temporary measure to counter the economic downturn. Until recently, banks were able to deviate from the requirement in 20 percent of cases.
The measure was to counteract the negative effects of the crisis and, in the period of greatest flexibility, house prices increased by 3.3 percent. If the temporary measures continue, they could drive prices up even more, according to Finanstilsynet. The Finance Ministry based its recommendation and reinforced it in early September.
Then it was also clear Statistics Norway expects interest rates to increase from mid-2021. At the same time, they predict house price growth in the coming years and dramatically increases forecasts. (Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content can only be done with written permission or as permitted by law. For more terms, see here.
