Households' financial accounts at the end of the second quarter of 2020

The corona pandemic has left its mark on the main picture in households' financial accounts in the first half of 2020. The pandemic has changed household behavior in the credit market and the change is reflected by historic high net lending. The development can be explained by a very large increase in household savings, which has boosted net lending in the financial accounts, especially through record high bank deposits. However, a reduction in short-term debt has also contributed to increased net lending.

In the second quarter of 2020, investments in securities increased significantly and the investments were largely driven by acquisitions of mutual fund shares. Debt growth slowed down in the last quarter, following the trend from previous quarters. The increase in mortgage loans has declined approximately in line with households total borrowing in the second quarter, while the number of households with temporary deferred debt obligations have increased. The debt to income ratio increased in the second quarter of 2020, which is the third quarter in a row with an increase in households the debt to income ratio.

Households' interest burden is closely related to the interest rate level. Norges Bank lowered the policy rate to zero in May 2020 and interest rates on loans in banks and mortgage companies have followed suit. The interest burden on loans in the banking sector has fallen in the second quarter of 2020, as lower interest rates have reduced households' interest expenses.