Norwegian government rules out looser mortgage regulations
Homeowners shouldn't expect a change in mortgage regulations aimed to ease the burden of rising interest rates by allowing households to pay off just the interest while rates are high.
Since June last year, the key policy rate has increased by 2.5 percentage points to 3.75 percent. Rates for mortgages will be higher, sitting between four and five percent.
As a result, a number of economists have called on the government to change the regulations to allow homeowners to just pay off the interest rather than interest and mortgage.
“There is nothing to wonder about. This is obviously the right move,” Kjetil Storesletten, a macroeconomist from the University of Oslo, told the newspaper Dagens Næringsliv.
However, the government isn’t open to such a regulation change and will not change the rules.
“Our assessment is that there is no need to make further changes to the regulations now,” State Secretary from the Ministry of Finance, Ellen Reitan, told the newspaper.
The key policy rate in Norway is currently at its highest level since 2008, with further increases expected. Norway’s central bank, Norges Bank, expects the key policy rate to peak at 4.25 percent. Meanwhile, some have predicted the rate will peak slightly higher at 4.5 percent.
READ ALSO: Why Norway's central bank keeps raising interest rates
Last year the government changed lending regulations to make it easier for prospective homeowners to obtain a mortgage in light of rising rates. Under the new rules, homeowners would have their finances tested against interest rate increases of three percent rather than the previous five percent.
Comments
See Also
Since June last year, the key policy rate has increased by 2.5 percentage points to 3.75 percent. Rates for mortgages will be higher, sitting between four and five percent.
As a result, a number of economists have called on the government to change the regulations to allow homeowners to just pay off the interest rather than interest and mortgage.
“There is nothing to wonder about. This is obviously the right move,” Kjetil Storesletten, a macroeconomist from the University of Oslo, told the newspaper Dagens Næringsliv.
However, the government isn’t open to such a regulation change and will not change the rules.
“Our assessment is that there is no need to make further changes to the regulations now,” State Secretary from the Ministry of Finance, Ellen Reitan, told the newspaper.
The key policy rate in Norway is currently at its highest level since 2008, with further increases expected. Norway’s central bank, Norges Bank, expects the key policy rate to peak at 4.25 percent. Meanwhile, some have predicted the rate will peak slightly higher at 4.5 percent.
READ ALSO: Why Norway's central bank keeps raising interest rates
Last year the government changed lending regulations to make it easier for prospective homeowners to obtain a mortgage in light of rising rates. Under the new rules, homeowners would have their finances tested against interest rate increases of three percent rather than the previous five percent.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.