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Norwegian markets regulator warns against rising household debt burden

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Norwegian markets regulator warns against rising household debt burden

Increasing house prices and a high debt burden could weaken Norway's economy, the country's financial markets regulator, Finanstilsynet, warned in its June risk outlook.

Households in Norway are vulnerable because most of the debt carries floating rates, which could have a negative effect if there were an interest rate hike, the watchdog added.

The regulator said it will monitor banks' compliance with its 2017 guidelines on consumer lending practices. These are set to expire in June, but the finance ministry is expected to announce potential rule revisions before that deadline, Reuters reported.

"The banks continue to fund a substantial portion of their business in the money and capital markets both in Norway and abroad. This renders them vulnerable to increased global uncertainty," Finanstilsynet Director General Morten Baltzersen said.

At the end of 2017, Norway's household debt stood at 225% of disposable income, Reuters reported, citing the regulator.