OSLO, Oct 29 (Reuters) - Norway’s combination of high household debt levels and high property prices continue to cause vulnerabilities in the country’s financial system, the central bank said in its annual report on financial stability on Monday.
At the same time, banks have become more resilient, and the outlook for financial stability is broadly unchanged from the previous report, Norges Bank concluded.
The central bank last month raised interest rates for the first time in seven years and said it would gradually lift the cost of borrowing in the coming years as inflation picks up and growth accelerates.
The report highlighted the risk from commercial real estate, which has generated high losses during times of crisis.
“Banks that use internal models to calculate capital requirements should give substantial weight to crisis-related loss data when calculating risk weights on commercial property loans,” Norges Bank Deputy Governor Jon Nicolaisen said. (Reporting by Camilla Knudsen, editing by Terje Solsvik)