Amendments to the lending regulation

The Ministry of Finance has decided to amend the loan-to-value (LTV) ratio requirement and the debt-servicing capacity requirement. The maximum LTV ratio for mortgages is increased from 85% to 90%. The debt-servicing capacity requirement is amended to allow lenders to take the risk-mitigating effects of fixed-rate loans into account. Both amendments are in line with recommendations from Norges Bank in the public consultation. The debt-to-income (DTI) limit of 500% is retained at the current level.

The regulation has included a sunset provision since it was first introduced in 2015, and the current regulation was set to expire on 31 December 2024. The regulation will now be continued indefinitely in line with recommendations from the Financial Supervisory Authority. The Ministry of Finance will continue to evaluate the regulation regularly.

Background

The current lending regulation entered into force on 1 January 2021, and succeeded earlier lending regulations. The current regulation applies to residential mortgage loans, consumer credits and consumer loans with other collateral than real estate, such as car loans. The regulation imposes restrictions on banks’ lending practices and includes requirements on:

• The customer’s debt-serving ability
• The customer’s debt-to-income (DTI) ratio
• Mortgage size in relation to property value, the loan-to-value (LTV) ratio
• Principal payments for all consumer loans and mortgages with a high LTV ratio

A proposal from the Financial Supervisory Authority to continue the regulation indefinitely was on public consultation from 23 August to 4 October 2024.