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The government maintains most of the requirements for mortgages and consumer loans as they are today, but merges what were previously two different regulations into a common loan regulation, the Finance Ministry warns in a press release.
– We decided to continue with the provisions of the credit regulations for a new period of four years, but with a mid-way evaluation. In this way, we give predictability to both individuals and banks, while forcing a periodic assessment of whether the requirements are well adapted to the market situation, says Finance Minister Jan Tore Sanner (H).
Finanstilsynet proposed earlier this fall to tighten mortgage regulations, among other things, by setting the cap on debt relative to lower income.
The government has now decided to continue with the current requirements for four new years, but with an evaluation midway.
These are the requirements for mortgages:
- The requirements for equity are 15 percent of the home’s value. This means that repayment loans should not exceed 85 percent of the home’s value (maximum loan-to-value ratio). In the case of overdrafts and mortgage loans on a secondary residence in Oslo, the maximum loan-to-value ratio is 60 percent, which corresponds to a capital requirement of 40 percent.
- The total debt of the client will not exceed 5 times the annual income.
- The client must bear an interest rate increase of 5 percentage points on the total debt.
- For loans with a loan-to-value ratio of more than 60 percent, banks must require an installment payment.
- Outside of Oslo, 10 per cent of the value of loans granted by the bank each quarter may be loans that do not meet all the requirements of the regulations (flexibility fee). In Oslo, 8 percent of the loan volume may be loans that do not meet all the requirements.
These are the requirements for consumer loans:
- The total debt of the client will not exceed 5 times the annual income.
- The client must bear an interest rate increase of 5 percentage points on the total debt.
- The finance company will require a monthly repayment that will be at least an amount that implies that the loan is repaid within five years. For overdrafts (such as credit cards), the minimum amount must be calculated each month based on the credit used.
- 5 percent of the value of the loans granted by a financial institution each quarter may be loans that do not meet all the requirements established in the regulations.
The case is being updated …
