The seasonally adjusted net financial asset-to-income ratio rose from 84 per cent of disposable income at the end of 2019 to 126 per cent at the end of 2024. This reflects that the value of households' net financial wealth has grown much faster than the sector's disposable income over the five-year period.
The overall picture can be explained by both high net holding gains and high net lending. In 2024, net holding gains amounted to as much as NOK 315 billion, while net lending is estimated at NOK 50 billion. Households' net lending in the five-year period is estimated to be significantly higher than the average net lending per year in the twenty three-year period from 2002 to 2024. This development is explained by unusually high financial investments and moderate debt growth, particularly in the last three years of the five-year period.
Bank deposits and mutual fund shares stand out. Transactions in bank deposits increased to record high levels during the pandemic years of 2020 and 2021, while acquisition of mutual fund shares increased sharply towards the end of the five-year period. Investments in mutual funds amounted to as much as NOK 56 billion in 2024, which is well above the average for the last five-year period, estimated at NOK 33 billion per year. There are few indications that households have depleted their savings, for instance, to finance consumer expenditure.
After two years of moderate debt growth, debt growth increased somewhat in 2024. However, the growth rate in the last three-year period is estimated to be well below the average growth rate per year in the twenty three-year period. The debt growth is reflected by the seasonally adjusted debt-to-income ratio, which was reduced by more than 8 percentage points in 2024. The debt-to-income ratio has fallen from 242.1 per cent of disposable income at the end of the second half of 2021 to 221.9 per cent at the end of 2024. The development in the ratio indicates that households' debt burden has been reduced by a considerable extent over the past 2.5 years.
The rise in interest rates in recent years had a full impact on households' interest expenses in 2024. We must go back to December 2008 to find an interest rate on loans from banks and mortgage companies higher than the interest rate in December last year. Households' interest expense burden towards the banking sector increased from 9.8 per cent of disposable income in 2023 to 10.9 per cent in 2024. The indicator is significantly higher than the average for the last fifteen-year period from 2010 to 2024, which is estimated at 6.7 per cent of disposable income per year.
In 2024, a benchmark revision of time series in households' financial accounts was conducted. The most significant revisions included the value of real estate abroad, which was reclassified from other accounts receivable to other equity; the value of foreign households’ real estate in Norway, which was moved from other accounts payable on households' balance sheet to other equity on private non-financial corporations' balance sheet; and an upward revision of households' loans to private non-financial corporations due to updated information. Transactions in defined benefit pensions schemes for employees in the local government sector and state-owned health trusts (hospitals) were revised downwards. This was due to reclassification of an annually adjustment of households’ pension entitlements that were reclassified from being a transaction to be a revaluation.
A new assessment has also been made of the classification of short-term and long-term loans from banks. The delimitation of short-term loans towards long-term loans for borrowers was adjusted starting from the first quarter of 2018, but this does not affect the macro picture for households.