A persistent rise in household debt ratios and high property price inflation over a long period suggest that financial imbalances have built up. Financial imbalances increase the risk of an abrupt decline in demand and bank loan losses. House prices have long risen considerably more than household disposable income, but house price inflation has slowed considerably since the turn of the year.

"Household debt growth remains high, and it will take time for household sector vulnerabilities to recede. The correction in the housing market may lower the risk of an abrupt and more pronounced decline further out", says Governor Øystein Olsen.

In line with Norges Bank's advice, the Ministry of Finance decided today to keep the buffer rate unchanged at 2 percent from the end of 2017.

• Ministry of Finance press release
• Norges Bank's advice is issued in the letter: Advice on the countercyclical capital buffer 2017 Q3
• The decision basis for Norges Bank's advice is presented in Section 5 of the September Monetary Policy Report (3/17)