”The Norwegian financial system is resilient. Households and firms have ample debt-servicing capacity, and banks are solid. At the same time, the risk of serious events that could weaken financial stability has increased”, says Deputy Governor Pål Longva. 

Geopolitical tensions and cyber threats, high and rising government debt in many countries and uncertainty about the implications of artificial intelligence are shaping the risk outlook. In a global and interconnected financial system, external shocks can quickly affect the Norwegian financial system. 

Most households have the financial capacity to cope with new economic shocks 

Norwegian households are highly indebted, but debt growth has been slower than income growth in recent years. Debt burdens have declined broadly across different groups and most among those with the highest debt.  

“Over the past two years, wages have risen more than prices. The debt servicing capacity and the purchasing power of many households have improved, even when taking the higher interest rates into account”, says Pål Longva.  

There are signs that households’ liquid buffers are increasing overall, after having declined in the years following the pandemic. Norges Bank’s overall assessment is that the vulnerability associated with high household debt has decreased somewhat. 

Higher interest rates put pressure on property values 

Norwegian banks’ commercial real estate (CRE) exposures are substantial. Solvency in the CRE sector has improved somewhat over the past two years, and the share of CRE firms with high debt and weak debt-servicing capacity fell in 2025. However, higher interest rates are putting pressure on property values.  

High construction and financing costs have dampened demand for new residential and commercial property in recent years and made conditions challenging for real estate developers. Bankruptcies have risen markedly, and banks report an increased risk of default. 

Capital requirements are bolstering resilience 

Banks’ losses are low, and banks satisfy capital and liquidity requirements by an ample margin. This is important for financial stability. Households and firms have ample access to credit. Norges Bank sets the countercyclical capital buffer rate each quarter. At its meeting on 4 November, the Committee decided to keep the buffer rate unchanged at 2.5 percent.   

“Norwegian banks’ capital buffer requirements are bolstering the resilience of the Norwegian financial system”, concludes Deputy Governor Pål Longva.