Finanstilsynet will tighten mortgages.
In a letter sent to the Ministry of Finance on Friday, Finanstilsynet advocates not continuing the high “flexibility quotas”. They have given banks greater opportunity for flexibility during the corona crisis.
In March, the flexibility ratio in the mortgage regulations was increased to 20 per cent. This should make it easier to limit the negative effects on the Norwegian economy as a result of the corona crisis.
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In a press release, Finanstilsynet writes:
– Households’ demand for loans has decreased in recent years, but has remained so far this year despite the corona crisis. With a very low interest rate level, there is a danger that house prices and household debt may increase further from an already high level.
The Authority has made the assessment of continuing to keep the quotas flexible, but believes it is not necessary.
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– In Finanstilsynet’s assessment, there is no need to continue the temporarily high flexibility quotas after the third quarter of 2020. With high activity in the housing market and significant borrowing, the ordinary flexibility quotas provide banks with good opportunities to grant applications for new loan agreements with changed repayment plans.
Ministry of Finance sent the proposal for consultation on Friday. The consultation deadline is 4 September.
