By L. C. Praxis · May 2026
I. The Observation
Norway has a strong safety net for health, unemployment and pensions. But for the housing economy — the largest financial commitment most people take on — there is little to cushion shocks.
When Norges Bank raised the policy rate from 0 to 4.5% between 2022 and 2024, a household with a NOK 5 million mortgage saw monthly interest expenses increase by roughly NOK 8,000. They had done nothing wrong. They had passed the bank's stress test. The interest rate changed, and the entire cost fell on them.
The bank was shielded — with a floating rate, the interest rate risk is contractually transferred to the borrower. The government did not intervene with interest rate compensation, even though it spent NOK 50 billion on electricity subsidies during the same period.
This raises some questions: Is this allocation of risk necessary? How do other countries handle it? And what are the consequences for those who cannot absorb the economic fluctuations?
II. What Do We Know?
Interest rate risk
In the United States, over 90% of mortgage holders have a 30-year fixed rate. Those who locked in 3% in 2021 still pay 3% today. France, Belgium and Denmark have similar systems. In Norway, over 90% have floating rates.
Statistics Norway (SSB) documented that the share of Norwegian households with interest expenses exceeding 15% of gross income rose from 4.2% to 14.5% between 2022 and 2023. Couples with children saw net interest expenses increase by an average of NOK 66,000 (SSB, 2024). The OECD has shown that countries with a high share of floating rates have a stronger "interest rate channel" — rates affect the economy faster — but that households are correspondingly more exposed (OECD, 2021).
In practice, this means monetary policy works through household liquidity. The most indebted households feel it the most.
Debt liability on housing losses
In 12 US states, including California and Arizona, the bank can take the property in case of default, but cannot claim remaining debt beyond the property's value (non-recourse). In Norway it is the opposite: the bank can take the property and still claim the difference.
Ghent and Kudlyak (2011) studied the difference. In states with limited debt liability, strategic default was 30% more common, but banks adapted by pricing the risk into interest rates. Spain, which had full personal liability, experienced severe social problems during the financial crisis: people lost their homes and were left with debt they could not service.
Debt restructuring and fresh starts
Norway's Debt Restructuring Act requires five years on a minimum budget. In the United Kingdom, the standard period is one year. In Canada, nine months. In the US, three to four months. Research across 27 countries shows that shorter restructuring periods correlate with higher entrepreneurship — people take greater risks when the consequences of failure are time-limited.
From 2025, the Norwegian scheme has been somewhat simplified. The requirement that the debtor first had to attempt to resolve the situation on their own was removed. Applications increased by nearly 50% in the first quarter, suggesting the old scheme was inaccessible for many who needed it.
Debt and health
Rojas (2022) followed individuals registered with the Swedish Enforcement Authority (Kronofogden) in a follow-up study. Over-indebted individuals had a 2.5 times higher suicide risk than the general population, controlled for unemployment, welfare, crime, depression and mental illness. Debt is thus an independent risk factor.
Bjorklund et al. (2023) found that among 641 over-indebted individuals in Sweden, 19.3% had attempted to take their own life at least once.
In Norway, researchers at OsloMet (Hughes & Hermansen) showed that women with payment difficulties had twice the suicide risk. Norway recorded 739 suicides in 2024 — the highest figure since 1999. Norway's action plan for suicide prevention does not mention debt problems as a risk factor.
III. What Does This Mean for Policy?
A core principle in Pragmatikerne's party program is that predictability is a prerequisite for personal responsibility. For housing policy, this implies three interconnected measures:
Predictable housing costs. If banks offer fixed rates for 15, 20 or 30 years, the household knows what the home costs on the day they sign. The rate will be somewhat higher than a floating rate, but the household is shielded from interest rate shocks.
Limited debt liability. If the housing market falls and the borrower cannot service the debt, they lose the home — but nothing more. The bank absorbs the loss and prices it into future lending. This is the standard arrangement in much of the world.
Shorter debt restructuring. A restructuring period of around two years. People whose finances have been destroyed should return to work and productive life within a reasonable time.
A point that may seem counterintuitive: this could mean fewer regulations for banks, not more. When banks themselves bear the loss risk, they have a self-interest in lending responsibly. The need for detailed lending regulations and stress test requirements from the Financial Supervisory Authority is reduced.
In recent years, the state has spent large sums on crisis packages — NOK 50 billion on electricity subsidies, and EU countries a combined EUR 758 billion in energy subsidies. When interest rates rose just as steeply, no comparable compensation was offered. A system with built-in stability would reduce the need for such ad hoc measures.
Norway already has good arrangements for health, unemployment and pensions. What is missing is predictability in the housing economy. These three measures are not about relieving people of responsibility, but about providing a framework in which they can actually plan and take responsibility.
References
Ghent, A. C. & Kudlyak, M. (2011). Recourse and residential mortgage default. The Review of Financial Studies, 24(9). → Full reference
Hughes, E. & Hermansen, A. S. (n.d.). Selvmord og betalingsproblemer [Suicide and payment difficulties]. OsloMet. → Full reference
OECD. (2021). Mortgage finance across OECD countries (Working Paper 1693). → Full reference
Regjeringen. (2025). Endringer i gjeldsordningsloven [Changes to the Debt Restructuring Act]. → Full reference
Rojas, Y. (2022). Financial indebtedness and suicide. Int. J. Environ. Res. Public Health, 19(19). → Full reference
Statistisk sentralbyrå. (2024). Økte renter og konsekvenser for husholdningenes inntekt [Increased interest rates and consequences for household income]. → Full reference
About the author: L. C. Praxis writes about politics, economics and everyday life for Pragmatikerne.
If you need help: If you are having thoughts of suicide, call Mental Helse's helpline: 116 123 (24/7). Kirkens SOS: 22 40 00 40.