Developments in household debt. An analysis of microdata for the period 1986-2003

Riiser, Magdalena D.; Vatne, Bjørn Helge
July 2006
Economic Bulletin (Norges Bank);Jul2006, Vol. 77 Issue 2, p72
Academic Journal
Household debt in Norway has increased substantially since the 1980s. This article uses microdata to describe developments in household debt, income and financial assets from 1986 to 2003. Our findings show that an increase in average debt, the number of households and the share of indebted households has contributed to the increase in debt since 1986. Most households have a moderate or low debt-to-income ratio. Debt among households with a high debt-to-income ratio was reduced as a percentage of total debt after the banking crisis in 1988-1992, but these developments have been reversed since 1998. This primarily reflects strong debt growth among young households. Our analysis shows that financial assets have primarily increased in households without debt or with a low debt-to-income ratio. The accumulation of financial wealth can therefore only to a limited extent be regarded as a buffer against increases in interest expenses.


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