Norwegians’ debt burden at record high

My Money.Photo: Frank May / NTB scanpix

Finance audit believes that high debt and high property prices could threaten economic and financial stability in Norway. Norwegians’ debt burden is now at a record high.

The analysis appears in the Authority’s fresh “financial perspective”.

‘’The household debt burden, measured by the ratio of debt to disposable income, is higher than ever’’ wrote Finanstilsynet.

The reason is that for several years, debt growth has been higher than income growth. Many people lack proper financial buffers the audit pointed out.

‘’A large proportion of households are vulnerable to income loss and interest rate increases. The high debt burden means that even a moderate interest rate rise will lead to significantly higher interest burden’’ said Morten Baltzersen, the Finance Audit (Finanstilsynet) director.

Although the rise in house prices is described as moderate in recent times, Finanstilsynet pointed out that high price inflation over a long period of time has contributed to increasing the risk.

‘’When the collateral values increase, it gives room to raise more loans, which in turn will push prices up. High prices and debt growth over time can lead to imbalances building up and increases the risk of losses in bank and life insurance funds’’ said Baltzersen.

The growth in households’ consumer loans has slowed somewhat, but annual growth remains high according to the report.

© NTB Scanpix / #Norway Today

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