Norway Credit Growth Unexpectedly Accelerated in January

Norwegian credit growth accelerated in January after the country’s central bank cut interest rates to protect the economy from the fallout of Europe’s debt crisis.

Credit growth was 6.9 percent in January, up from 6.7 percent in December, the Oslo-based statistics agency said today. It was estimated to remain unchanged, according to the median forecast of six analysts.

The central bank in December lowered its main rate by half a percentage point to 1.75 percent, its biggest cut since May 2009, to avoid excessive krone gains and guard against the fallout of Europe’s debt crisis. Low borrowing costs coupled with stable unemployment have encouraged households to take on more debt. Governor Oeystein Olsen said this week that consumer debt as a percentage of disposable income has reached a record level at 220 percent.

Credit growth has fueled real estate investments. Norway’s house prices rose an annual 8.4 percent in January, according to the Real Estate Brokers Association.

Robert Shiller, the co-creator of the S&P/Case-Shiller home-price index, said in January Norway is in the grip of a house price bubble, while the International Monetary Fund on Feb. 2 warned of real estate and credit market risks in Norway.

To contact the reporter on this story: Josiane Kremer in Oslo at

To contact the editor responsible for this story: Jonas Bergman at

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