Summary: Credit growth, household debt, property prices and banks’ wholesale funding are important systemic concerns. Key sources of cyclical systemic risk include the strength of mortgage lending (the credit-to-GDP ratio and the household debt-to-disposable income ratio both stand at around 200 percent), and the strong rise in, and overvaluation of, house prices (house prices are believed to be overvalued by some 20–60 percent). In the structural dimension, systemic risk arises primarily from the heavy dependence of Norwegian banks on wholesale funding. Low interest rates may be fuelling credit and asset price growth, while the main macroeconomic vulnerability is falling oil prices.

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