Decomposition of the increase in household debt
- Kjersti-Gro Lindquist, Haakon Solheim and Bjørn Helge Vatne
- Economic Commentaries
Average debt among Norwegian households has increased substantially over time. A decomposition analysis shows that debt growth to a great extent reflects higher incomes and higher house values. For homeowners, debt growth has also been driven by an increased willingness or ability to borrow. For home buyers, both first-time buyers and homeowners buying a new home, reduced borrowing related to the value of the dwelling has curbed the increase in debt. This is in line with the expected effect of a new regulation setting stricter requirements for residential mortgage loans.
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