Norwegians are at the top of the world in debt, and the level of debt has worried politicians and the Norwegian Financial Supervisory Authority for years. That is why there are lending regulations which primarily set a number of requirements for anyone who wants to take out a loan with a mortgage on the home. Several of the requirements will now change from 1 January 2023: Can withstand a smaller interest rate rise: The banks do not have to take into account that people must withstand a 5 percentage point rise in interest rates. The requirement is changed to 3 percentage points, but the customer must still tolerate at least 7 percent interest. Easier to buy more homes in Oslo: People who want to buy a secondary home do not have to put up 40 percent equity in Oslo. The requirement is reduced to 15 percent equity. Defying Finanstilsynet’s advice, Finanstilsynet also believed that no one should be allowed to borrow more than 4.5 times their income, but the government retains the current requirement of 5 times income. For a number of years, they have asked the politicians to tighten up, so that the economy can withstand a situation of rising prices and rising interest rates. And now the interest rate is actually on the rise, and house prices have fallen unusually much for several months in a row. Next week, Norges Bank is expected to raise interest rates again. But the government disagrees with the Norwegian Financial Supervisory Authority, and believes that the current situation calls for softer requirements: – The high level of debt in Norwegian households still constitutes a vulnerability in the financial system. We are therefore continuing requirements for the banks’ lending practices, but making adjustments to adapt the requirements to the economic situation, says Finance Minister Trygve Slagsvold Vedum (Sp). Finance Minister Trygve Slagsvold Vedum (Sp) has been in a dilemma as to whether he should tighten or soften loan requirements when house prices fall and interest rates rise. Photo: Marita Andersen / news Putting an important loan requirement in reverse Until this year, the most important speed breaker was that people could not borrow more than 5 times their annual income. Banks and estate agents have seen this autumn that the requirement to tolerate a 5 percentage point higher interest rate has become a more important loan brake. With mortgage interest rates of 4 per cent, customers had to endure 9 per cent interest on the loan. From the new year, the requirement will be 7 percent. – What the government is doing now is to correct the big mistake in the lending regulations, which is that at the same time as the interest rate rises, you have to tighten the lending options, says director of personal market Endre Jo Reite at BN Bank to news. Director of personal market Endre Jo Reite at BN Bank Photo: Morten Andersen / news He believes that the current regulation with more expensive interest rates means that many people have received up to 25 to 30 per cent less in loans than before because of the interest rate requirement. – With the stroke of a pen, the government can reverse it, so that you don’t have to borrow as much less as you did a year ago, says Reite. Sees a softer fall in house prices The real estate industry has warned against a complete housing slowdown if the government followed the Finanstilsynet’s advice to tighten the requirements for obtaining loans. Now the brokerage industry is rejoicing, and believes that the changes from 1 January will reduce the risk of a steep fall in house prices. Carl O. Geving in the Norwegian Estate Agents’ Association. Photo: Joakim Karlsen – This will help to resolve the uncertainty associated with financing home purchases and make it easier to get the necessary interim financing. This is important to keep activity going in the housing market, says managing director Carl O. Geving of the Norwegian Real Estate Association. – We are very positive and think this is a particularly wise decision, says Eiendom Norge CEO Henning Lauridsen. Eiendom Norge CEO Henning Lauridsen. Photo: Vegar Erstad / news – But isn’t it now that interest rates are rising that the authorities should ensure that the banks enable their customers to withstand a jump in interest rates? – Yes, but here we have two things that solve this in an excellent way. One is a new Financial Agreements Act from the turn of the year, which prohibits the bank from giving loans to people without sufficient credit, says Lauridsen. According to him, the second reason is that the banks have to reduce lending anyway because people’s expenses have become higher. – We are not worried about financial instability.
ttn-69
The government makes it a little easier to get a mortgage – news Norway – Overview of news from different parts of the country
