Norway extends mortgage restrictions until end-2019 (updated)

Sparebanken Ost

19/06/2018 10:39

(Adds background, detail)
    OSLO, June 19 (Reuters) - The Norwegian government extended
its restrictions on mortgage lending on Tuesday, including
special measures for the country's capital, as it sought to
maintain a drive to limit growth in household debt.
    "The high debt of Norwegian households still pose
significant risk to the economy and to jobs," the finance
ministry said in a statement.
    The rules were extended by 18 months, and will thus be valid
until the end of 2019, it added.
    The finance ministry tightened its restrictions on banks'
mortgages in January 2017 in a bid to limit household borrowing
and prevent a potential house price bubble, with a particular
focus on reining in the Oslo market.
    Norway has the third-highest level of debt-to-income among
OECD countries behind Denmark and the Netherlands. It was 225
percent at the end of 2017, up from around 130 percent at the
turn of the century.  urn:newsml:reuters.com:*:nO9N1QI000
    The rules that were introduced last year, and which were due
to expire in June, force borrowers to put up more equity when
buying a home by cutting the maximum loan-to-value ratio of a
mortgage to 85 percent from 90 percent.
    For Oslo however, current rules allow only a 60 percent
loan-to-value for secondary homes, preventing many investors
from buying up property, and this rule will be maintained, it
added.
    A borrowing cap set at five times household annual income
was also extended, as were rules allowing banks to make
exemptions for up to 10 percent of the total value of loans
granted per quarter outside the capital and for up to eight
percent in Oslo.

 (Reporting by Camilla Knudsen, writing by Terje Solsvik,
editing by Gwladys Fouche)
 ((terje.solsvik@thomsonreuters.com; +47 918 666 70; Reuters
Messaging: terje.solsvik.thomsonreuters.com@reuters.net))