Jensen warns home buyers: The interest rate will rise – Aftenbladet.no

Finance Jensen intensifying efforts to avoid a Norwegian housing bubble. She will prevent the danger that vulnerable families can get debt problems which could have repercussions for the entire economy, writes Aftenposten.

Thursday meetings finance minister Norwegian economists deliberation – while advice she has received from the FSA is out for consultation.

Although she believes that we can learn from the experience of the collapse of the US housing market that helped trigger the financial crisis in 2008.

– It is valuable to study experience in the US, although they are not directly transferable to Norway, says finance minister told Aftenposten.

During his meetings of the International Monetary Fund in Washington this weekend, she went American politicians and prominent economists at think tanks in the US capital.

– Housing burst bubble before the financial crisis, affected many Americans and got repercussions both for the US economy and the world economy. Here did the Americans some dearly bought experience that it might be wise to learn from, says finance minister.

– Does not the experience of other countries that it required strong measures to avoid a debt-financed housing bubble?

– I’ve asked FSA advice and Authority recommendation is circulated. I have already said from that not all councils that have come up in the debate that we like, such as increased property taxes. But we need a broader debate on housing policy and the increase in household debt, says Jensen.

Seeking advice from Norwegian economists

For the Council made in the Ministry of Finance Thursday, she has invited Norwegian economists who have worked with the housing market. The danger that high household debt at a time can give financial institutions issues on the agenda.

– Is it more important than ever before to be safe in Norway?

– Yes. People are vulnerable precisely because the home is the biggest investment most of us do. When the housing market in Norway has been quite hot, it is important for them offering apartments. But in addition, that many may get a big bill if something goes wrong. Many have borrowed a lot of money and will a big challenge when interest rates go up, she says.

Inflation remains

Tuesday came figures from Statistics Norway (SSB) which shows that the housing market keeps steam .

• In Oslo and Bærum prices rose 11.9 percent from Q1 last year to Q1 this year. It is the highest annual growth in four years shows the series of quarterly from Statistics Norway.
• Then follow the rest of Akershus, Bergen and northern Norway with inflation in the range from 7 to 8.6 percent last year.
• For the country rose by 7.2 per cent last year. It is the highest annual growth since Q3 2011.

The last monetary policy meeting at Norges Bank was in March this year. As so often before the last year downgraded Governor Øystein Olsen its interest plans. He promises to cut interest rates to record low 1 percent before the summer. Down there he plans to keep interest rates out 2017.

Pending higher rate

Jensen believes that it is not a question of if , but if when interest rates go up.

– It is obvious that it will happen at some point. We must avoid that it causes problems.

– How?

– This question has many sides. We need to look at the regulation of banks. Must be built more. There is no doubt that demand is greater than supply in major cities, says Jensen.

Norwegians debt is high and rising

– Is there a danger that Norwegian home buyers fooling themselves?

– People have a personal responsibility to serve its loans and allow for higher rate than we have today. But it is also a social issues, she said.

She recalls that the government has already announced that it will present a broad housing policy strategy before the summer.

– Strengthened your discussions in the United States the impression that Norwegian households have a high debt?

– Norwegians have high debt and the still increasing. Most have a lot going on in his private finances. But many also have major problems if things change. There may be more demanding when the situation in the Norwegian economy and business change.

Do we have a housing bubble in Norway? What measures will you put in to cool the market?

Definition of housing bubble: People are buying property in the expectation that house prices will rise. This drives up prices and lures into even more so as demand drives up prices even more.

Chief Economist Elisabeth Holvik, SpareBank1 group (be on dialogue with Jensen):

We know from history that periods of abnormally low interest rates and tax favoritism housing causes the housing becomes an investment object. There is a danger that this is about to happen in the largest cities. Gearing has increased sharply and in some districts in Oslo is up to 40 percent of the homes owner’s residence number two or three.

I would have removed the wealth tax and the deductibility of interest on debt. If that is not possible, I would have appreciated residential number two or three to the full value of the wealth tax. New initiatives from the FSA will be able to curb inflation in the short term by tightening the availability of loans. However, the underlying imbalance is that interest rates are too low and that there is a lot of money in the economy. Therefore, buyers will that get help from family or others could circumvent tightening.

Chief Economist Roger Bjørnstad, Socio-economic analysis (to be on dialogue with Jensen):

Until now we could not explain the rise in dwellings with conditions in the economy and population. Now it looks as though this is no longer able to explain the entire inflation. This allows us to ask about a housing bubble is approaching. Low interest rates combined with low tax drives house prices.

I support Scheel-committee’s proposal to treat housing and other assets in the wealth tax. If this is not possible, we need much more powerful measures to stimulate housing construction in cities. Developers must get easier access to land and municipal processing must be faster. I do not think new measures from the FSA will curb inflation in particular.

Christian Dreyer, Property Norway (association for estate agents):

The total loan cost of a mortgage is the same as in 2007. This is because the interest rate is very low, while house prices have risen the lot. It shows that the household capacity is there with current interest rates. Yet there is reason for concern if inflation continues. Therefore it makes sense to discuss action.

The most important measure is to facilitate increased supply by more housing in the big cities. A more current measures to curb demand for housing by tightening of loan supply. If FSA get acceptance for all its proposals will dampen demand. But it does not solve the problem long term.