The lending regulations
The new lending regulations govern the banks’ practice and options for granting a customer a loan.
Here you can read more about what’s new and how the changes affect you as a loan customer. If your loan application was rejected before the new year, you should perhaps apply again now. Contact us for good advice about this.
The new lending regulations apply from 1. January 2023 up to and including 31 December 2024.
The Ministry of Finance has set a framework for how banks can lend money. This is important to ensure a more sustainable debt situation for most people. Lending practices for mortgages have been regulated in regulations since 2015, but now there have been some changes that are worth noting. From 1. From July 2023, the regulation will be extended to also apply to loans with mortgages other than housing, such as boat and car loans .
House prices have increased a lot in recent years and so has household debt. This is the reason why in 2015 the Ministry of Finance made a regulation regulating lending practices for mortgages. The mortgage regulations have since been further developed and amended three times. The consumer loan regulations were established in 2019, where it was decided, among other things, that the maximum term for new consumer loans should be 5 years.
Among other things, the regulation sets requirements for:
- The customer’s serviceability, how much does the customer have left over to pay the loan after other fixed costs have been paid?
- Debt ratio: How much debt does the customer have in relation to income?
- Loan-to-value ratio: How large is the loan in relation to the home’s value?
- Requirement to pay installments on mortgages with a loan-to-value ratio of over 60% and all consumer loans
For those of you who want to buy a rental property in Oslo, the new lending regulations will benefit you. You can now borrow up to 85% of the value of a secondary home in Oslo, compared to the previous 60%.
Requirements in the lending regulations
| MORTGAGE | CONSUMER LOANS | CAR/BOAT LOAN | |
| Max loan-to-value ratio (loan amount divided by property value) | 85 percent of value | – | – |
| Max loan-to-value ratio, framework loan/home equity credit line | 60 percent | – | – |
| Requirement to pay installments | Yes, on loans over 60 per cent | All loans | – |
| Max debt ratio (how much total debt in relation to income) | 5 times (500 percent) | 5 times (500 percent) | 5 times (500 percent) |
| How much interest must the customer be able to pay on the loan (stress rate) | The higher of 7 percent or an interest rate increase of 3 percent | The higher of 7 percent or an interest rate increase of 3 percent | The higher of 7 percent or an interest rate increase of 3 percent |
| Flexibility quota (how many loans can deviate from the rules?) | 10 per cent (in Oslo: 8 per cent) | 5 percent | 10 percent |
More information about the biggest changes in the lending regulations:
The interest rate stress test requirement changes:
Previously, the banks had to take into account an interest rate increase of 5 percentage points when assessing the customer’s serviceability. They then used today’s floating interest rate and the plus of an extra 5 per cent as a starting point. The customer then had to be able to afford to pay this sum if the interest rate rose by 5 per cent more than the current interest rate. From 01. From January 2023, banks must add a stress interest rate of at least 3 per cent or a total interest rate of 7 per cent when assessing the customer’s serviceability. Many customers who, before the New Year, had their loan application rejected or received a lower financing certificate than they wanted, should apply again now.
| Current interest rate on the customer’s debt: | Interest the bank must calculate: |
| Higher than 4 percent | The interest rate + 3 percentage points |
| Lower than 4 percent | 7 percentage points |
Secondary housing in Oslo:
The previous requirement for the purchase of a secondary home was a maximum loan-to-value ratio of 60%. This has now been lifted and the general requirement of a maximum 85% loan amount will also apply to loans for the purchase of home number 2 or 3 in Oslo. Here you can read more about loans for secondary housing.
Requirements for debt ratio and serviceability also for other mortgages:
Previously, only loans with mortgages on housing were covered by the requirements regarding debt level and serviceability. From and including 01 July 2023, this will also apply to other types of mortgages such as car and boat loans.
The Oslo quota for small banks is increased :
What is the mortgage flexibility ratio? This quota is 10.00% of all lending each quarter, with the exception of Oslo, where it is 8.00%. Many banks choose to use this quota to prioritize young and first-time buyers. Regardless of lending volume, loans for a total of NOK 10 million can now be granted in Oslo that do not meet all the requirements in the regulations.
In addition, an alternative quota for small banks is introduced, which will be increased from 01.01.2023 to NOK 15 million.
The purpose of the alternative quota is that banks with limited lending in Oslo should also be able to show flexibility to customers in Oslo who do not meet all the requirements in the regulation.
Interest rate change:
An interest rate change to the customer’s disadvantage (i.e. an increased interest rate) can take effect no earlier than two calendar months after notification was sent from the bank. Previously, there was a 6-week notice period.
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