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Mortgage and consumer loan regulations will disappear if Finanstilsynet gets what it wants. Instead, the Authority proposes to introduce new and stricter regulation to “counteract the accumulation of debt in vulnerable households.”
Published:,
The case is being updated …
Finanstilsynet proposes to the Ministry of Finance that a new regulation be introduced to replace the mortgage and consumer loan regulations. It appears in a press release.
The proposed loan regulation will cover all loans from financial companies to individuals.
“In Finanstilsynet’s assessment, the consideration of financial stability indicates that limits are still being set for banks’ lending practices, and that regulatory regulation is extended to include loans to individuals with mortgages other than housing,” the authority writes in the press release.
The new proposal comes after the Ministry of Finance asked Finanstilsynet in April to assess whether it was necessary to maintain regulatory regulation of banks’ credit practices after 2020. In particular, the Authority was asked to assess whether the regulations they should be extended to loans that are not in current regulations. covered by regulations.
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Will squeeze
The regulation proposes, among other things, that the total debt of the borrowers does not exceed 4.5 times the annual gross income when granting new loans. This is five times less than the income under current mortgage regulations.
The Authority writes that it wants current regulations tightened to “counteract the accumulation of debt in vulnerable households.”
It is also proposed that the flexibility fee for mortgages be reduced from ten percent to five percent for the entire country. From this quota, banks can, in individual cases, grant exemptions from other rules in the regulations. Only for mortgages Finanstilsynet believes that there should be such an exceptional fee.
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It will not have an expiration date
Finanstilsynet does not want a date set for the expiration of the proposed loan regulations. Instead, the Authority wants it to be evaluated periodically, for example every two years and for the first time in the fall of 2022.
“The regulation of credit practices is an intrusive measure. The scope and duration of regulations should be based on proportionality and tailored to the underlying risk that the regulation aims to help reduce, ”writes Finanstilsynet.
In the Authority’s view, the proposed requirements will imply a “moderate tightening” of banks’ lending practices. In the opinion of Finanstilsynet, these austerity measures are “well adapted to the consideration of financial stability in prevailing economic conditions”.
In addition, Finanstilsynet confirms that it will return to the Ministry of Finance with the advice of changes, possibly dissolution, of the regulations “if the evolution of household indebtedness and the consideration of financial stability dictates it.”
