Countercyclical capital buffer unchanged at 2.5 percent
At its meeting on 13 August 2025, Norges Bank’s Monetary Policy and Financial Stability Committee decided to keep the countercyclical capital buffer rate unchanged at 2.5 percent.
About the countercyclical capital buffer
The countercyclical capital buffer is intended to strengthen banks’ solvency and mitigate the risk that banks amplify an economic downturn.
The countercyclical capital buffer is intended, in principle, to range between 0 percent and 2.5 percent. Norges Bank will normally set the buffer rate in the upper part of this range. If a downturn will or could cause a marked reduction in credit supply, the countercyclical capital buffer rate should be lowered. In the event of particularly high cyclical vulnerabilities, the countercyclical capital buffer rate may be set above 2.5 percent. If cyclical vulnerabilities recede significantly over time and the outlook for financial stability is good, the buffer rate may be reduced. Norges Bank sets the countercyclical capital buffer rate each quarter.
Heightened risk of shocks
The global economy is marked by uncertainty about international trade policies. There is a heightened risk of shocks that may impact the Norwegian financial system (see Financial Stability Report 2025 H1). Financial system vulnerabilities could amplify a downturn in the Norwegian economy and lead to bank losses.
Firms and households have ample access to credit
In Norges Bank’s lending survey for 2025 Q2, banks reported unchanged credit standards for firms and households, following credit easing for households in Q1 as a result of changes to the Lending Regulations. Household and corporate credit demand increased somewhat, and banks reported stronger competition. Banks expect unchanged credit standards and a slight further increase in demand in Q3. Bond market activity declined in April as a result of uncertainty about international trade policies but picked up again before summer. Credit premiums have fallen in recent months for firms with high credit ratings and are close to the average for the past ten years. In Norges Bank’s overall assessment, households and firms have ample access to credit.
Household credit growth has accelerated over the past year
High and rapidly rising debt can amplify economic downturns and increase the risk of financial crises. For a long period, debt rose faster than household income. In recent years, debt growth has been slower than income growth.
Should the debt-to-income ratio decline over time, the household sector could become less vulnerable to interest rate increases and income loss. Vulnerability may increase again if looser financial conditions result in rapidly rising house prices and debt.
Household credit growth has accelerated somewhat over the past year but has remained stable in recent months. Credit growth is normally closely linked to house price inflation, which was high at the beginning of 2025 but has since been moderate. Turnover in the secondary housing market has been high in recent months. New home sales are still at a very low level but the number of housing start permits has increased.
Stable prospects for commercial real estate
Following a sharp fall in 2023, estimated commercial property selling prices rose slightly towards the end of 2024 as a result of higher rents. Selling prices rose further in 2025 Q1 but without a corresponding increase in rents.
Higher interest rates in recent years have pushed up financing costs and reduced CRE firms' profitability. High employment and growth in rental income enable most firms to service higher interest expenses with current earnings.
CRE firms' profitability and property values will deteriorate if interest rates or risk premiums rise markedly or rental income proves markedly lower than expected (see Financial Stability Report 2025 H1). In that event, many CRE firms may face difficulties servicing debt.
Overall corporate sector solvency is strong. The share of bankruptcies among Norwegian firms has risen somewhat since the beginning of 2024 and is now close to the historical average. So far this year, the share of firms facing debt collection has been high, and the share of bankruptcies in Norwegian firms is expected to increase somewhat further in 2025, particularly in the real estate sector.
Buffer requirements strengthen financial system resilience to downturns
Norwegian banks are highly profitable and satisfy capital and liquidity requirements by a solid margin. Although banks’ corporate credit losses increased somewhat in 2024, they remain low. The solvency stress test in Financial Stability Report 2025 H1 shows that banks can absorb large credit losses, while still having the capacity to lend.
The countercyclical capital buffer rate of 2.5 percent helps maintain bank resilience. Resilient banks are important for ensuring that financial system vulnerabilities do not amplify downturns.
The Committee unanimously decided to keep the countercyclical capital buffer rate unchanged at 2.5 percent.
Ida Wolden Bache
Pål Longva
Øystein Børsum
Ingvild Almås
Steinar Holden
13 August 2025