The Norwegian Financial Supervisory Authority has published its Financial Outlook assessment of risks in Norway’s financial system, finding that the main vulnerabilities remain high household debt and elevated residential and commercial real estate prices, while risk in real estate development has increased. The report also points to heightened geopolitical and trade-policy uncertainty, greater digital vulnerability and the risk of systemic cyber incidents, and new financial-system vulnerabilities linked to strong growth in stablecoins and other cryptoassets. Economic growth has remained resilient through 2025 despite higher tariffs and geopolitical shifts, while record equity markets driven by technology and artificial intelligence have contributed to high asset valuations and low risk premia that could amplify the risk of sharp price corrections. A 2025 mortgage lending survey shows average loan-to-value ratios on new mortgages have increased, with lending shifting toward the new regulatory cap of 90% maximum loan-to-value for amortising loans. Within commercial lending, analyses indicate an increasing share of debt is concentrated in property development companies with high bankruptcy risk and weak debt-servicing capacity, with some already generating significant loan losses at certain banks. Banks remain profitable and meet capital requirements with a margin, but 2025 changes under the Capital Requirements Regulation 3 lowered risk-weighted assets for standardised banks while, for internal ratings-based banks, the combined effect of CRR3 and a higher mortgage risk-weight floor modestly tightened requirements, with common equity tier 1 impacts varying by around plus or minus one percentage point. Insurers and pension funds are assessed as having satisfactory solvency and profitability despite weaker investment income in the first three quarters of 2025, and the shift toward defined-contribution pensions and growth in individual investment products is framed as increasing firms’ responsibilities to support informed customer choices and safeguard customers’ interests in asset management.
Norwegian Finanstilsynet 2025-12-04
Norwegian Financial Supervisory Authority flags higher property development credit risk and growing cyber and crypto vulnerabilities in its Financial Outlook
The Norwegian Financial Supervisory Authority's Financial Outlook highlights high household debt and elevated real estate prices as key vulnerabilities in Norway's financial system, with increased risk in real estate development. It also notes geopolitical uncertainty, digital vulnerabilities, and new risks from stablecoins and cryptoassets. Despite these challenges, banks remain profitable, insurers and pension funds maintain satisfactory solvency, and economic growth has been resilient through 2025.