The key policy rate will increase by a total of one percentage point until the end of 2022, according to Statistics Norway’s forecasts. Mortgage rates will then be around 4 per cent.
– We have assumed four interest rate increases of 0.25 percentage points by the end of 2022, writes Statistics Norway (Statistics Norway) about their economic forecasts.
– This is a slightly lower interest rate path than in our previous cyclical report, but at the same time somewhat higher than what is priced in the forward rates, the report stated on Thursday.
The downward adjustment is primarily due to poorer outlook in the international economy and lower interest rates both in the eurozone and in the US.
Statistics Norway believes that the Norwegian economy will still have a moderate rise, but warns that lower growth internationally or a markedly lasting fall in the oil fund can create problems for companies and fiscal policy.
– The possibility that we will get a further escalation of ongoing trade conflicts is still present, writes Statistics Norway.
House prices a bit up
House prices will have a cautious rise, according to the report. Population growth is lower than in previous years, and thus the demand for housing is not as great, but at the same time, investments in housing have fallen.
– A market that is particularly affected by the interest rate being raised is the housing market, says SSB researcher Thomas von Brasch, according to Dagens Næringsliv .
House price inflation is subdued by higher interest rates, as he has to spend more on managing the increased interest rates, he says.
Higher interest rates will cause people to take up smaller loans for housing purposes. The growth in household debt will gradually decline from around 6 per cent last year to around 4 per cent in 2022, according to the forecast. Statistics Norway also believes that house prices will subside slightly in the short term because people do not look as bright about economic developments.
The key word is neutral
Statistics Norway points out that wage growth in Norway has picked up slightly and that Norges Bank last year increased its interest rate for the first time in two years. In addition, fiscal policy has become more neutral, after a period when the state spent more money and at the same time reduced taxes.
– Overall, it seems that the Norwegian economy will be close to cyclical neutral throughout the period up to 2022, writes the agency.
According to the forecast, the available real income will increase by just under 2.5 per cent during this period, but the estimate is slightly lower if one withdraws payments of share dividends.