June 6, 2018 / 8:49 AM / in 2 years

Norway FSA sees stronger case for extending mortgage restrictions

OSLO, June 6 (Reuters) - A recent upturn in Norwegian housing prices has further boosted the case for extending the country’s restrictions on mortgage lending, the country’s Financial Supervisory Authority (FSA) said in a semi-annual report on Wednesday.

The regulator has for years warned against the effects of higher housing prices, which have been accompanied by a surge in household debt, making the economy vulnerable in case of a sustained downturn.

“In the period since (the FSA) submitted its recommendation to the Ministry of Finance, house price growth has picked up, contributing to continued high borrowing by the household sector,” it said.

“This strengthens the rationale for continuing the regulation of residential mortgage lending as proposed,” the FSA added.

The regulations are due to expire by the end of June, but the finance ministry is expected to announce a decision before that time on any potential revisions to the rules.

At the end of 2017, household debt stood at 225 percent of disposable income, the FSA said. (Reporting by Camilla Knudsen, writing by Terje Solsvik, editing by Gwladys Fouche)

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