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– It was important to put banks in the best possible position to help credit customers in a demanding period. We are now seeing signs of a recovery in the Norwegian economy and there is high activity in the housing market. Therefore, the requirements for banks’ lending practices should return to normal, Finance Minister Jan Tore Sanner (H) said in a press release on Friday morning.
The temporary flexibility quota in mortgage regulations that was introduced in connection with the crown crisis is now being adjusted again.
The Mortgage Regulation establishes requirements for people’s service capacity and the loan-value relationship.
Banks have previously had the opportunity to deviate from these requirements by up to 10 percent of loan volume each quarter.
In March, banks were given more flexibility to raise these shares to 20 percent both in Oslo and the rest of the country in the second quarter.
Following the advice of Finanstilsynet
The decision to introduce a tightening of mortgage regulations follows a recommendation from Finanstilsynet in late August.
Later, Finanstilsynet advised the ministry to abolish the temporary scheme with a 20% flexibility quota.
– Finanstilsynet noted, among other things, that with a very low interest rate level, there is a danger that house prices and household debt will rise further from an already high level. Norges Bank, like most advisory bodies, has agreed with Finanstilsynet’s assessment, the ministry writes in the press release.
In the period since the temporary quota was introduced, house prices rose 3.3 percent.
Welcome the proposal
Chief Economist Nejra Macic of the Forecasting Center was not surprised by Finanstilsynet’s proposal and believed it could have an effect on the housing market.
– I probably don’t think it’s the biggest driver, it’s the interest rate cuts that are. But it shouldn’t be underestimated either that it has contributed to house prices developing so strongly, he said in August.
She thought it was a good idea not to extend the flexibility increase.
– What Finanstilsynet is proposing sounds sensible. It does not appear that it is necessary for the diversion rate to remain high beyond the third quarter.(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 may only be done with written permission or as permitted by law. For more terms, see here.
