Interest rate adjustment for mortgages
Most mortgages in Norway have a floating rate agreement, which means that the bank can raise or lower the interest rate on certain agreed terms.
In two decisions in January 2026, the Norwegian Financial Services Complaints Board concluded that the banks' interest rate adjustment provisions were unreasonable and contrary to Sections 36 and 37 of the Contracts Act on unfair terms, interpreted in light of EU Directive 93/13 on unfair terms in consumer contracts.
The interest rate adjustment provisions give the lender the right to unilaterally increase the interest rate when the change is objectively justified on the basis of dispositions by Norges Bank that affect the money market rate, changes in the bond rate, other credit policy decisions, or changes in the general interest rate level for creditors' borrowings. In addition, the lender reserves the right to unilaterally increase the interest rate when the change is objectively justified on the basis of consideration for the lender's earning capacity in the long term, restructuring of the lender's borrowing or similar special circumstances on the lender's side, and when the change is objectively justified by a follow-up of the authorities' view of the lender's interest rate policy.
The lender is also entitled to unilaterally increase the interest rate when the change is objectively justified by individual circumstances of the credit, e.g. when collateral (collateral, surety) has been reduced in value, or when other changes have occurred on the credit customer's hand that result in increased risk for the creditor.
The Tribunal made an overall assessment of the individual elements of the provision, which contains a number of general and broadly formulated criteria, including market conditions, the bank's borrowing costs, operating costs and earning capacity. The majority was of the view that these criteria combined give banks considerable room for manoeuvre, while the borrower does not have the opportunity to anticipate or verify interest rate changes. The resulting ambiguity creates an imbalance in the contractual relationship that the majority of the Tribunal considered unreasonable and contrary to Sections 36 and 37 of the Contracts Act.
The Tribunal did not take a position on the consequence of the unreasonableness, i.e. whether the originally agreed interest rate or other interest should apply. There is reason to believe that the courts will soon be invited to decide on the issue.
Interest rate adjustment for business loans
The Norwegian Financial Services Complaints Board only handles complaints from consumers, and the decisions described above under section 1 apply to residential mortgages to consumers. The decisions have also been made with reference to the EU directive on unfair terms in consumer contracts. They are therefore not automatically decisive for whether similar interest rate adjustment provisions in loan agreements with businesses can be considered unreasonable.
However, Section 36 of the Contracts Act applies generally to agreements, and reads:
"An agreement may be set aside or amended in whole or in part to the extent that it would seem unreasonable or contrary to good business practice to make it applicable. The same applies to unilaterally binding dispositions.
The decision takes into account not only the content of the agreement, the position of the parties and the circumstances surrounding the conclusion of the agreement, but also subsequent circumstances and the circumstances in general.
The rules in the first and second paragraphs apply correspondingly when it would seem unreasonable to apply commercial practice or other contractual custom."
The courts have traditionally been reluctant to apply the provision in business relationships. However, it may be asked whether a loan agreement between a business and a bank can lead to a similar imbalance in the contractual relationship as in the case of a consumer loan, and whether this can lead to the application of Section 36 of the Contracts Act. Conditions on changes in the margin on NIBOR loans can also be made subject to the same assessments. Borrowers should monitor and request further justification for changes in interest rates and margins.
