WARNING: – More and more young people are “maximizing” the mortgage, but the debt ratio is also increasing among the elderly, says chief economist Christian Frengstad Bjerknes. Photo: NBBL
Covid-19 has not provided a standard demand-driven downturn in the Norwegian economy. More and more young people are “maximizing” the mortgage. With high housing prices, it is not surprising that young people struggle to stay within the limits of the mortgage regulations. As many as 27 per cent of new loans have a debt ratio of more than 4.5 times income.
– The mortgage survey shows an increasing debt ratio and more vulnerable households, close to 1 in 2 new loans have a debt burden of over 400 per cent. As a result, Norges Bank may be forced to raise interest rates faster than expected, says chief economist Christian Frengstad Bjerknes of the Norwegian Housing Association.
The debt ratio among the elderly (65+) is still as high as 288 per cent, about the same as in 2019, but up from 269 per cent in 2018. Good health and free time contribute to many people continuing their consumption and lifestyle into retirement.
– It is an ever so small paradox that Norges Bank provides “ban gas” with zero interest rates at the same time as Finanstilsynet recommends balancing this by tightening lending regulations. It is easy to point out winners and losers of such a policy, Frengstad Bjerknes concludes.
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