Norway’s financial authority (Finanstilsynet) wants to tighten lending requirements, part of an effort to curb the country’s ever-rising debt levels. It’s proposing a lower limit on how much private individuals can borrow, and tightening lenders’ latitude for making exceptions.
With interest rates historically low, based on the central bank’s key policy rate of 0.0 percent, it’s become easier to qualify for a mortgage. The authorities want to reduce maximum lending limits, from five-times annual income to 4.5.
They have also sent a proposal to the finance ministry calling for stricter regulations for lenders, who must take into consideration consumer debt levels when issuing additional loans.
The Corona crisis has not hurt Norway’s hot real estate market, and housing prices continue to rise. Tighter lending requirements may cool the market down and increase affordability, so the authorities are trying again to rein in borrowing. They proposed similar measures last year, but former Finance Minister Siv Jensen of the Progress Party rejected them. Her party has since withdrawn from Norway’s Conservatives’ led government coalition.