Mortgage costs higher than in the 1990s – LO is concerned

Global Courant

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– A very large part of family budgets must go to paying off debts. They have to cut back on other things, but that is difficult for some families. They are in a very vulnerable situation and under pressure, chief economist Roger Bjørnstad tells NTB in LO.

LO Chief Economist Roger Bjørnstad thinks more people will struggle with their mortgage this winter. (Photo: Didrik Linnerud Arnesen) More…

He is concerned about the debt burden Norwegians face with mortgages, with ever-rising interest rates.

– Interest rates are now pinching much harder than before, because people have had to take on debt over the past twenty to thirty years to even participate in the housing carousel, he says.

Heavy load

Norway has had much higher interest rates in the past, for example in the 1980s and 1990s. But Bjørnstad points out that Norwegians had smaller loans at the time.

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In addition, you received a higher tax deduction for the interest you paid.

– Norwegian household debt has become so high that current interest rates, with a bank rate of around six percent, correspond to an interest rate of, for example, 10 percent in the 1990s, says Bjørnstad.

Researcher Thomas von Brasch from Statistics Norway (SSB) made the same point earlier this month in an interview with NTB.

– Although forecasts indicate that the interest rate peak is close, we are not quite over the edge yet. Interest costs for households are expected to increase. We’re going all the way back to the early 1990s and seeing levels as high as we expect next year, he said.

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Calls for measures in the budget

The LO economist has repeatedly criticized Norges Bank for raising interest rates too much. He believes that much of the price increase in Norway has been imported from abroad.

It is a good thing that the central bank announced another interest rate increase in December.

– Norges Bank believes that they should raise interest rates to fight inflation. People in debt will then become the determining parameter in economic policy, and that will have unfortunate consequences, says Bjørnstad.

He is calling for government action in the national budget due next week, pointing to rental subsidy schemes and increased child benefits as examples of possible measures.

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– Those who have a loan and own their own home are one thing. But we also see that rents for those who do not own their own home are also skyrocketing. There is no better situation for them.

Many are struggling financially

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Bjørnstad points to the Sifo report that was presented earlier this week.

This shows that 150,000 households in Norway are financially ‘bad’. In this group, 58 percent answer that they have cut back on food consumption to pay for electricity. 72 percent have reduced social contact.

A large portion of them are also behind on paying their bills, and Bjørnstad doesn’t necessarily think this will get better anytime soon.

– Many people are already struggling to pay off their loans, he says.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases via links that lead directly to our pages. Copying or other use of all or part of the contents may only be made with written permission or as permitted by law. For further conditions see here.

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Mortgage costs higher than in the 1990s – LO is concerned

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