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Last Trade - 12/05/21

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Market Cap £23.98bn
Enterprise Value £55.88bn
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UPDATE 1-Norway tightens mortgage rules to cool housing market

Tue 17th March, 2015 8:23am
OSLO, March 17 (Reuters) - Norway's bank regulator proposed 
tighter mortgage regulations on Tuesday, warning that low 
interest rates could fuel already rapid house price growth, 
raising the risk of a sharp correction and financial 
instability. 
    The regulator said it would close loopholes that allow banks 
to deviate from its lending guidelines and it would require more 
strenuous stress tests on borrowers because house price growth 
is too high, even though the broader economy has been hurt by 
the slump in the price of crude oil, Norway's top export 
commodity. 
    Norwegian economic growth will halve this year to just over 
1 percent, Statistics Norway has said, which will likely force 
the central bank to cut interest rates, lowering borrowing costs 
even though the household debt to income ratio is around 200 
percent, one of the highest in Europe. 
    "There is a risk that the prospect of long-lasting low 
interest rates and easy access to credit will cause the strong 
growth in debt and house prices to persist," the Financial 
Supervisory Authority said in a statement. 
    "That would further increase households' debt burden and 
help to maintain demand for goods and services for a time, but 
such a development is not sustainable," it added. 
    It said that new regulations will allow it to impose 
corrective orders on banks that breach them.  
    House prices are seen rising by 3.6 percent this year, above 
the 2.9 percent expected wage growth, Statistics Norway said 
earlier. 
    The maximum loan to value ratio will remain at 85 percent 
but the regulator will close loopholes that allow banks to go 
higher, and the room to deviate from the 85 percent rule will be 
sharply cut.  
    The regulator will require banks to test whether a borrower 
can manage a 6 percentage point rise in interest rates, above a 
previous test of 5 percent. 
    New rules will also require annual instalment payments of at 
least 2.5 percent from the first year on all mortgages with a 
loan-to-value ratio above 65 percent. 
    "If the ministry approves this I think it would mean a 
slowdown of lending growth which could trigger a fall in house 
prices. It does not mean we will see a big fall, but it will 
have a moderate effect," economist Kyrre Aamdal at brokerage DNB 
Markets said. 
 
 (Reporting by Balazs Koranyi, Terje Solsvik and Stine Jacobsen; 
Editing by Hugh Lawson) 
 ((Balazs.Koranyi@thomsonreuters.com; +47 2331 6596; Reuters 
Messaging: balazs.koranyi.thomsonreuters.com@reuters.net)) 
 
Keywords: NORWAY LENDING/
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