House prices have risen sharply in many parts of the country over the past year, and household debt growth has accelerated. High house price inflation and a persistent rise in household debt ratios suggest that financial imbalances continue to build up, increasing the risk of an abrupt decline in demand and bank loan losses further out.

In 2016 Q4, the Ministry of Finance decided, in line with Norges Bank's advice, to raise the countercyclical buffer rate from 1.5 percent to 2 percent, effective from 31 December 2017.

"Banks are well-positioned to meet the capital requirements. Tighter requirements in the residential mortgage loan regulation, effective from January 2017, may have a dampening effect on household borrowing and reduce household vulnerabilities", says Governor Øystein Olsen.

The Ministry of Finance decided today to keep the buffer rate unchanged, in line with Norges Bank's advice. (Ministry of Finance press release.)

Norges Bank's advice is issued in the letter: Advice on the countercyclical capital buffer 2017 Q1.

The decision basis for Norges Bank's advice is presented in Section 5 of the March 2017 Monetary Policy Report (1/17).