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OSLO, June 19 (Reuters) - The Norwegian government extended its restrictions on mortgage lending on Tuesday, including special measures for the country’s capital, as it sought to maintain a drive to limit growth in household debt.
“The high debt of Norwegian households still pose significant risk to the economy and to jobs,” the finance ministry said in a statement.
The rules were extended by 18 months, and will thus be valid until the end of 2019, it added.
The finance ministry tightened its restrictions on banks’ mortgages in January 2017 in a bid to limit household borrowing and prevent a potential house price bubble, with a particular focus on reining in the Oslo market.
Norway has the third-highest level of debt-to-income among OECD countries behind Denmark and the Netherlands. It was 225 percent at the end of 2017, up from around 130 percent at the turn of the century.
The rules that were introduced last year, and which were due to expire in June, force borrowers to put up more equity when buying a home by cutting the maximum loan-to-value ratio of a mortgage to 85 percent from 90 percent.
For Oslo however, current rules allow only a 60 percent loan-to-value for secondary homes, preventing many investors from buying up property, and this rule will be maintained, it added.
A borrowing cap set at five times household annual income was also extended, as were rules allowing banks to make exemptions for up to 10 percent of the total value of loans granted per quarter outside the capital and for up to eight percent in Oslo. (Reporting by Camilla Knudsen, writing by Terje Solsvik, editing by Gwladys Fouche)