Household credit demand fell slightly in 2026 Q1, while corporate demand remained broadly unchanged. Banks expect slightly higher demand from households and unchanged demand from corporates in Q2. As in 2025 Q4, banks report stronger competition and lower lending spreads for both residential mortgage loans and corporate loans. Banks expect a continued increase in competition in corporate lending in Q2 and a further decline in lending margins in both segments.

Households

Overall, banks report that residential mortgage demand fell slightly in 2026 Q1 (Chart 1). By comparison, in 2025 Q4, banks expected unchanged demand in 2026 Q1 (Chart 2). Banks report broadly unchanged demand for fixed rate and first-home mortgages in Q1. Overall, banks expect demand for residential mortgages to increase slightly in 2026 Q2. 

Credit standards for households were broadly unchanged in 2026 Q1, and banks expect no change in Q2 (Chart 1).

Chart 1 Residential mortgage demand, credit standards and lending spreads

Chart 2 Household residential mortgage demand

Overall, banks report that lending spreads and residential mortgage lending rates fell slightly further, and more than expected, in 2026 Q1 (Chart 3). Banks expect lending spreads to fall somewhat further in Q2, while lending rates are expected to remain broadly unchanged. Funding costs for residential mortgages increased slightly in Q1, and banks expect funding costs to increase slightly further in Q2. Banks also report a slight increase in competition for residential mortgages, which was more pronounced than expected. Banks expect competition to remain approximately unchanged in Q2.

Chart 3 Banks’ lending rates, lending spreads and operating environment. Residential mortgage loans

In 2025, the average risk weight floor for residential mortgages among banks using the internal ratings-based approach (IRB) was raised from 20% to 25%, while the risk weight for the safest residential mortgages among banks using the standardised approach was reduced from 35% to 20%. When asked how these changes have affected banks' lending rates and volumes, five out of eight banks report that lending spreads have fallen somewhat, while one bank reports that spreads have fallen substantially. Furthermore, three out of eight banks report that lending volumes have fallen somewhat as a result of the changes, while one bank reports that volumes have fallen substantially.[1]

Corporates

For loans to non-financial corporates, banks as a whole report approximately unchanged demand in 2026 Q1 and also expect no change in Q2 (Chart 4). Credit line utilisation and demand for fixed-rate and commercial real estate (CRE) loans were also broadly unchanged, and banks expect approximately no change in Q2. On the whole, banks report broadly unchanged credit standards in Q1 and expect credit standards to also remain unchanged in Q2.

Chart 4 Credit demand, credit standards and lending spreads. Lending to non-financial corporates

Banks also report that corporate lending spreads fell somewhat in 2026 Q1, and they expect spreads to fall somewhat further in Q2 (Chart 5). Lending rates fell slightly, and banks' funding costs for loans to non-financial corporates were broadly unchanged. Banks expect a slight increase in funding costs in Q2, but lending rates are expected to remain broadly unchanged. Furthermore, banks report somewhat stronger competition for corporate loans in Q1, and they expect competition to continue to strengthen in Q2. Banks have reported stronger competition for corporate loans in every quarter since 2023 Q4, and some banks now report that this is affecting loan conditions for corporates.

Chart 5 Banks’ lending rates, lending spreads and operating environment. Lending to non-financial corporates

In this survey, banks are asked about their assessments of real estate development and CRE firms over the past six months. These questions were last posed in 2025 Q3.

For loans to real estate development, four out of nine banks report a somewhat higher risk of default and breach of the terms of loan covenants over the past six months (Chart 6). Two banks report that the risk of breach of the terms of loan covenants has increased substantially, while one bank reports that the risk of default has increased substantially. By comparison, in 2025 Q3, three out of nine banks reported that the risk of default or breach of the terms of loan covenants had increased somewhat, while two banks reported that the risk had increased substantially.

Chart 6 Banks’ assessment of real estate developers

Developments in the last six months

Seven out of nine banks report a broadly unchanged risk of CRE borrowers breaching the terms of loan covenants relating to interest coverage ratios (ICRs), while two banks report that this risk has increased somewhat (Chart 7). Six out of nine banks report a broadly unchanged risk of CRE borrowers defaulting on their loans, while three banks report that this risk has increased somewhat. Furthermore, six out of nine banks report unchanged use of interest rate hedging among CRE firms, while one bank reports that the use has increased somewhat and two banks report that the use has declined somewhat.

Overall, more banks now report increased risk associated with CRE loans compared with six months ago. In 2025 Q3, eight out of nine banks reported a broadly unchanged risk of borrowers breaching the terms of loan covenants relating to ICRs, while one bank reported that this risk had declined somewhat. Seven out of nine banks reported a broadly unchanged risk of CRE borrowers defaulting on their loans, while one bank reported that this risk had increased somewhat and one bank reported that it had declined somewhat. Furthermore, five out of nine banks reported broadly unchanged use of interest rate hedging among CRE firms, while two banks reported that the use had increased somewhat and two banks reported that the use had declined somewhat.

Chart 7 Banks assessment of the CRE segment

Developments in the last six months 

Footnotes

[1] The lending survey only includes IRB banks.

 

Source (all charts): Norges Bank