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Amendments to the lending regulation

Today, the Ministry of Finance has adopted amendments to the Norwegian bank lending regulation. The amendments will take effect on 1 January 2023.

The Ministry of Finance has decided to amend the regulation’s requirement on debt-servicing ability, so that lenders must ensure that the customer has sufficient funds to cover regular expenses after an interest rate increase of at least 3 percentage points. At a minimum the customer must be able to be to cover expenses if the interest rate was 7 percent. The current requirement is that the customer must be able to cover regular expenses after an interest rate increase of at least 5 percentage points.

The regulation sets a limit for how large a residential mortgage loan can be relative to the property value (LTV ratio) at 85 percent. Since 2017, the regulation has included a separate LTV limit of 60 percent for loans with a secondary dwelling in Oslo as collateral. This separate LTV limit will expire on 31 December 2022.

The regulation currently applies to residential mortgage loans and consumer credits. From 1 January 2023, the regulation will also cover loans with other collateral than real estate, such as car loans. Lenders must adapt their credit standards for loans with other collateral by 1 July 2023.

Background

The current lending regulation entered into force on 1 January 2021 and shall apply until 31 December 2024. A proposal from the Financial Supervisory Authority to amend the regulation were on public consultation from 3 October to 14 November 2022. The current regulation is in large part a continuation of mortgage loan regulations from 2015, 2016 and 2018, and a consumer credit regulation from 2019.