Norges Bank says risks to financial stability have increased

Norges Bank said on 11 November that the risk of serious events that could weaken Norway’s financial stability has increased, although the financial system remains resilient.

Geopolitical tensions, cyber threats, high and rising government debt in many countries, and uncertainty about artificial intelligence are shaping the risk outlook, the bank said. Shocks from abroad can quickly affect Norway because the financial system is globally interconnected.

Deputy Governor Pål Longva said households and firms have ample capacity to service their debt and that banks are solid. The assessment was published in Norges Bank’s twice-yearly Financial Stability Report.

Household debt vulnerability has eased somewhat

Norwegian households remain highly indebted, but debt has grown more slowly than income in recent years. Debt burdens have declined across household groups, with the largest reductions among those with the most debt, Norges Bank said.

Wages have risen faster than prices over the past two years, Longva said. The bank said this has improved many households’ debt-servicing capacity and purchasing power, even with higher interest rates. It also reported signs that household liquid buffers are increasing overall after falling in the years following the pandemic.

Norges Bank’s overall assessment is that vulnerability linked to high household debt has decreased somewhat. It said most households have the financial capacity to cope with new economic shocks.

Property-sector pressures persist

Norwegian banks have substantial exposure to commercial real estate. Solvency in the sector improved somewhat over the past two years, and the share of firms with high debt and weak debt-servicing capacity fell in 2025, the bank said.

Higher interest rates are putting pressure on property values. High construction and financing costs have also dampened demand for new residential and commercial property in recent years, making conditions challenging for developers. Bankruptcies have risen markedly, and banks report an increased risk of default.

Banks’ losses are low, and they meet capital and liquidity requirements by an ample margin, Norges Bank said. Households and firms have ample access to credit.

On 4 November, the bank’s committee decided to keep the countercyclical capital buffer rate at 2.5 percent. Norges Bank said capital buffer requirements bolster the resilience of the financial system.