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EXPLAINED: What rising interest rates in Norway mean for you

Loan and mortgage repayments in Norway are set to go up due to rising interest rates. Here’s what the increased rates mean for you and why it isn't all bad news. 

EXPLAINED: What rising interest rates in Norway mean for you
Rising interest rates won't just affect property prices. Photo by Eirik Skarstein on Unsplash

Norway’s central bank, Norges Bank, has decided to raise the key interest rate from zero to 0.25 percent as part of its strategy to bring interest rates up to 1.75 percent by 2024. 

“The normalisation of the economy indicates that it is now right to start a gradual normalisation of the key interest rate,” Øystein Olsen, governor of Norges Bank, said in a statement

On the surface, this might come as a blow to consumers, especially those who have taken out loans and mortgages in the past two years, as interest rates have been fixed to zero.

The hike means that mortgage repayments will become more expensive for the 109,000 first-time buyers in Norway who have never experienced rising interest rates before. 

Another knock-on of an increase in interest rates that will affect homeowners and house hunters is the slowing down of rising house prices and weaker purchasing power. 

“All in all, purchasing power will weaken. This, in turn, will lead to a more moderate development in the housing market and a weaker price development,” Carl Geving, CEO of the Norwegian Real Estate Association, explained to public broadcaster NRK

EXPLAINED: What do Norway’s rising house prices mean for you?

In addition, while billpayers may not notice the extra 0.25 percent interest initially, interest rates are expected to steadily increase for the foreseeable future. That is something consumers should always prepare for, Ola Honningdal Grytten, a professor of economic history at the Norwegian School of Economics, explained to NRK

“One should always expect that interest rates may rise. For example, if you take out a loan, you should think that you must have room for the interest rate to rise by 3-4 percentage points, compared with when the loan was taken out. However, not everyone does that,” he explained to NRK. 

In fact, Grytten thinks the rises should actually be met as good news. 

“As a nation, we should be happy that interest rates are on the rise,” he said. 

This is because interest rates rising from historically low levels is a sign that the economy is on the mend and beginning to bounce back from the Covid-19 pandemic. 

Norges Bank argues that the higher rate has been brought in because it is satisfied that the Norwegian economy has recovered from the pandemic. 

The reopening of society has given a marked boost to the Norwegian economy and activity is now higher than before the corona pandemic. Unemployment has fallen further, and capacity utilisation seems to be close to a normal level,” the bank said in a statement.

The Norwegian Confederation of Trade Unions (LO) said that gradual interest rate rises could have several positive effects. 

When rates rise, the value of the krone is expected to rise, which will make investing in Norway an attractive proposition, which can help create jobs and wealth in Norway. 

It also spells good news for those hoping to go on holiday or foreign residents wanting to visit home as a strong krone means better value for money when travelling abroad. 

However, Roger Bjørnstad, chief economist at LO, said that it was vital that rates weren’t increased too quickly. 

“It is essential that we do not go too fast now and see an abrupt reaction – both in the housing market and the foreign exchange market,” he told NRK

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MONEY

Digital nomads: Who can work remotely in Norway?

The digital nomad lifestyle is taking off in a number of countries in Europe. If you're considering moving to Norway as a foreigner with the intention of carrying out remote work and you want to find out more about the relevant rules – we've got you covered.

Digital nomads: Who can work remotely in Norway?

More and more people are embracing the perks of a digital nomad lifestyle. By leveraging modern technology, digital nomads are able to travel and work remotely, enjoying liberties that were far-fetched for the workforce of the 20th century.

While such a lifestyle can sound attractive, some countries have regulations that make life quite hard for digital nomads.

What are the key aspects of the regulatory framework for remote work in Norway? Is it a good destination for international digital nomads?

The Local has compiled a guide to address some of the main concerns of all would-be digital nomads that dream of moving to the North.

Strict requirements for remote work

Unfortunately, Norway is not exactly a “digital nomad-friendly” country when it comes to the immigration and labour rules that govern remote work.

As the Norwegian Directorate of Immigration (UDI) points out on its webpage, all those planning to work remotely in Norway need to have a residence permit that gives them the right to carry out such work in the country.

As the UDI notes, with the exception of European Union (EU) and European Economic Area (EEA) citizens, all international citizens working in Norway must have a residence permit in order to have the right to (remote) work in Norway.

In a clarification published in June of 2022, the UDI pointed out that “working for a Norwegian or foreign employer off-site (e.g., from a hotel, a home, or similar)” is “considered remote work,” adding that this also applies to the self-employed in Norway or abroad.

That means that foreign nationals cannot work for their employer in their home country while in Norway on a visit or holiday, regardless of whether they’re in the country on a visa-free stay or if they have a visitor visa.

As the Norwegian immigration authorities point out, foreign nationals can only work remotely in Norway if they have a residence permit that gives them the right to do so.

There are several different types of residence permits that provide workers with the necessary rights to carry out remote work, such as a permanent residence permit, a residence permit for work where remote work is part of your job, and a residence permit for family immigration.

Best options for digital nomads interested in Norway

Both EU and EEA citizens have the right to visit and work in Norway, and they also have the option of registering as self-employed persons in the country.

In practice, this leads to some EU and EEA citizens spending short periods of time (a few weeks or months) working for foreign employers while staying in Norway without encountering any significant issues – even without the necessary permits.

However, if you stay in Norway for longer periods of time, note that such “grey area” arrangements can lead to issues related to the payment of taxes and tax residency.

So, if you’re an EU/EEA citizen looking to stay in Norway for more than just a month or two, try to get your residency permit in place as fast as possible.

If you’re not an EU citizen, digital nomad sites often recommend Norway’s independent contractor visa as the closest thing the country has to a digital nomad visa.

But what is it, who can get it, and how can you get it?

Norway’s independent contractor visa

Norway’s independent contractor visa is intended for non-EU citizens, and while it’s not officially a visa for digital nomads, they tend to recommend it as it allows self-employed professionals who want to stay in Norway for a longer period of time.

The independent contractor visa is a residence permit issued to eligible remote workers, giving them the right to work remotely in Norway for two years. The idea behind this visa was to attract international professionals to move to Norway.

Digital nomads looking to take advantage of this opportunity need to meet multiple requirements, with the most tricky one being that they need to have at least one corporate client based in Norway to be able to apply.

Norway also has a digital nomad visa program aimed at professionals who want to relocate to Svalbard, a rugged archipelago between the Norwegian mainland and the North Pole.

As legal experts at LawyersNorway.eu point out, if you successfully establish yourself there, you will be able to move to other parts of Norway later on.

So, if moving to Svalbard isn’t a deal-breaker for you, then this just might be the right gateway to relocating to Norway.

How to apply for the independent contractor visa

In order to qualify for the Norwegian independent contractor visa, you’ll need to meet the following requirements:

1. At least one Norwegian client: You will need at least one Norwegian corporate client to be eligible for this type of visa. Expect the authorities to require a contract with the client as proof.

2. A valid passport and an address in Norway: First off, you need to have a valid passport. You also need to have your accommodation in Norway taken care of, as you’ll be asked to provide an address. You’ll likely need to provide a tenancy contract as proof.

3. Proof of self-employment and proof of income: You will be asked to provide proof of business establishment and activity outside of Norway, and the authorities will also verify whether your income allows you to move to and live in Norway.

Note that the minimum annual income you’ll need is around 370,000 kroner, and you’ll be required to provide bank slips and/or statements to prove you earn that income each year.

To get more information on the various residence permits and work rights in Norway, consult the UDI’s website.

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