Sunniva Aga has just bought her first home. – It’s the joy of having your own, but you get millions in debt. So it’s a little scary. Without student loans, with a fixed income and money saved up, she bet on getting a mortgage. Still, she reacted to the different experiences she had with different banks. – The bank I have had since I was a child gave me a budget and an overview of how things could go if the interest rate increased. – Then I spoke to another bank, which wanted to give me a lot more in loans. According to Aga, there was talk of 300,000-400,000 more in loans, without her being explained how she would be able to pay it off if the interest rate goes up 5 percent. – So it’s about being aware yourself too, and seeing what comes in and what goes out. Both interest rates and prices are increasing. For Sunniva Aga, it is important to be confident that she will manage even if things become more expensive. Photo: Kristoffer Apall / news Several borrowers have high debts On Thursday, the Norwegian Financial Supervisory Authority presented this year’s mortgage survey. It shows that the total debt for those who took out new loans is high: Almost half of all mortgages were given to people who had more than four times their gross annual income in debt. Slightly more than a quarter of the loans were given to people who had loans of more than 4.5 times their gross annual income. You can borrow a maximum of five times your gross annual income when taking out a mortgage. The limit is set so that you have the opportunity to pay off the loan, even if the interest rate rises – which it has done in the past year. And quite a lot: Have been worried for a long time – This year’s survey shows the same high average debt ratio as last year among those who take out a new mortgage. That’s according to director of digitization and analysis at Finanstilsynet, Per Mathis Kongsrud. Nevertheless, the situation is different this year due to the interest rate increases. – And a large part of the debt is still taken up by people with a high level of debt, he adds. Finanstilsynet repeats the message borrowers have been hearing again and again: Households with high debt will be extra exposed in the event of increased interest rates or loss of income. – There is a danger that these households will not be able to pay off their own loans. We have been worried about this for a long time, says Kongsrud. Per Mathis Kongsrud is director of digitization and analysis at Finanstilsynet. Photo: Stian Lysberg Solum / NTBP Per Mathis Kongsrud is director of digitization and analysis at Finanstilsynet. Photo: Stian Lysberg Solum / NTB Lack of price adjustment When asked if the banks are too lenient and give too many loans, Kongsrud replies that the banks “stress test” their customers. – All borrowers must cope with a 5 percentage point interest rate increase. It is in the regulations. Today, the key interest rate is 2.25 per cent. This means that those who get a mortgage must endure an interest rate increase to 7.25 per cent. A possible interest rate increase is part of the calculations the bank makes before they can issue a mortgage. As part of the calculation, the bank must include a calculation for normal living expenses. – And there are some banks that have not updated their calculations sufficiently in this year’s survey, says Kongsrud. This means that some of the banks have not adjusted for increased prices for food or electricity, for example, before they have issued loans. – Have to prioritize differently Ingjerd Spiten, executive vice president for personal markets at DNB – which is the largest lender in the housing market, is nevertheless not worried about the development. – What we see from our figures is that those with mortgages with us have also saved a lot during the pandemic. They have probably prepared for a higher mortgage interest rate, believes Spiten. Figures from DNB show that a household with a loan of NOK 3 million can have increased expenses of up to NOK 10,000 per month. And that’s only from the mortgage. – Yes, there is a lot. My opinion is that the mortgage is the first thing you pay, so then you have to save elsewhere, says Spiten.
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Several borrowers have high debts – news Norway – Overview of news from various parts of the country
