ECB and ESRB were notified by the Central Bank of Norway about extension of a measure regarding altered requirements for new residential mortgage loans. As per the notification, the Ministry of Finance has extended the temporary changes in the mortgage regulation in response to the COVID-19 pandemic. The Ministry of Finance decided to continue the increased flexibility quotas in the mortgage regulation until the third quarter of 2020. The intended effect of the measure is to alleviate the financial stress mortgage holders are facing in the current crisis.
The mortgage regulation allows a certain amount of a lender’s approved loans to deviate from the requirements in the regulation. This quarterly quota is 10% of the volume of a lender’s approved new mortgages outside Oslo and 8% for new mortgages in Oslo. In April, the Ministry of Finance announced temporary measures to increase both the quotas to 20% for the period of April 01, 2020 to June 30, 2020. Central Bank of Norway notified ECB and ESRB that the Ministry of Finance decided to extend the temporary increase in the quotas until September 30, 2020.
The main purpose of the change in the regulation is to strengthen the ability of banks to help their customers through the crisis. The outlook for the Norwegian economy indicates that many mortgage customers will have an increased need for flexibility. This may include self-employed who have provided housing as collateral for loans and are now in need of capital. If banks want to provide new mortgage customers with the possibility to delay the payment of installments for a certain period, they must use the flexibility ratio. Likewise, they must use the flexibility ratio if they want to provide the same opportunity to customers who refinance an existing mortgage.
Keywords: Europe, Norway, Banking, COVID-19, Macro-Prudential Measures, Central Bank of Norway, Credit Risk, RRE, Residential Mortgage Lending, ECB, ESRB
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).