The Unassuming Economist

From the IMF’s latest report on Norway:

“Further improvements were made to the macroprudential policy framework, but some recommendations remain outstanding, especially with respect to housing (Annex IV). Following the introduction of the consumer credit regulation in 2019 and the establishment of credit registries, the volume of consumer credit declined, and there are now substantially fewer borrowers with very high consumer debt. Temporary relaxation of mortgage lending regulation that facilitated debt restructuring and home-equity withdrawals ended, and support measures to households were rolled back. Staff continues to recommend to permanently preserve tighter mortgage regulation limits for Oslo now that the recovery is sustained and given still high house price growth in the capital (Box 3). As emphasized during pervious consultations, other targeted measures, including easing restrictions on the supply of new housing, altering regulations to boost construction efficiency, and curbing demand through a gradual phasing out of mortgage interest deductibility should also be implemented. In September 2021, Norges Bank was granted decision-making responsibility for setting the countercyclical capital buffer (CCyB), which is set four times a year, and advisory responsibility for the systemic risk buffer, in line with the 2020 FSAP recommendation. Recommendation powers on other tools should also be granted (Annex IV).”