Financial Supervisory Authority’s proposal to tighten mortgages must also include sound rules for consumer loans, believes Endre Jo Reite at SpareBank 1.
– The problem is that consumer loans are often the last straw in the private economy that breaks the camels back, says Reite to newspaper Dagens Næringsliv.
It was in September that FSA suggested several tighter mortgage regulations that will make it harder to take out mortgages.
Reite credit manager at SpareBank 1, consider a natural consequence to be increased demand for consumer loans.
He believes there is a glaring gap between the demands of the mortgage and the requirements imposed on banks to hand out consumer loans. Reite believes there is a clear connection between the tightening of mortgage lending and the explosive growth of consumer debt.
The new proposal on mortgage requirements means that the total debt can not exceed five times your gross annual income.
Installment consumer loans of over 60- 70 percent of gross income is in turn a consumer trap that should not be common practice to provide, mean Reite.
The Credit Manager is receiving support from the Consumer Council that the tightening of consumer loans also need space.
However, a regulation control for this type of loan is not currently on the books.
Source: NTB scanpix / Norway Today