The Financial Supervisory Authority of Norway has recommended retaining the minimum average risk weights for institutions using internal models at 25% for residential mortgages and 35% for commercial real estate loans after the current floors expire at year-end. Its consultation paper concludes that risks in the property markets remain high and have not changed materially since the Ministry of Finance set the floors in December 2024. The floors are intended to prevent these exposures from receiving unduly low risk weights in capital requirement calculations. Commercial real estate lending has generated substantial losses during past crises, while Norwegian household debt remains high relative to disposable income both historically and internationally. Retaining the floors would maintain prudent risk weighting and support the capital strength of the Norwegian financial system.
2026-09-18Norwegian Finanstilsynet
Financial Supervisory Authority of Norway recommends retaining mortgage and commercial real estate risk weight floors at 25% and 35%
The Financial Supervisory Authority of Norway recommends retaining risk weight floors of 25% for residential mortgages and 35% for commercial real estate loans after year-end. It assesses property market risks as still high, citing commercial real estate loss potential and persistently elevated household debt.