Norway is moving closer to easing mortgage lending standards as the nation's deflating property market prompts concern among lawmakers that existing regulations are too tight. Real estate prices, which have doubled over the past decade and touched a record high this year, are now dropping faster than the central bank had predicted. The Conservative-led government, which won power in September, says it is now looking into raising the amount banks can lend to borrowers to 90 per cent of a property's value, from 85 per cent previously, in an effort to support first-time buyers. "Norwegian banks are already in a good position," Hans Olav Syversen, the head of the parliamentary finance committee in Oslo and a member of the Christian Democrat party that the government relies on to rule, said in an interview last week. "We're asking for a more flexible rule. A 10 per cent down-payment should be enough if banks take into account individuals and their own ability to pay their debts," he said. Norway's housing market, which Nobel laureate Robert Shiller said last year was in a bubble, has been inflated by a period of record-low interest rates that fuelled a borrowing spree in Scandinavia's richest nation and left Norwegians more indebted than ever before. Households now owe about twice their disposable incomes to their creditors, a level the central bank and the financial regulator has warned is unsustainable. Yet recent real estate data show that house price gains have reached a tipping point. House prices slid a seasonally adjusted 1.5 per cent in October from a month earlier, dropping for a second month, according to data from the Norwegian Real Estate Agents Association. Nordea Bank, the largest Nordic lender, forecast earlier this month that house prices will fall as much as 20 per cent over the next two years, forcing the central bank to cut its main rate twice next year, from the current 1.5 per cent. "It's a rather hard landing," said Erik Bruce, senior economist at Nordea. Yet economists are unsure what effect easing mortgage lending standards will have at this point in the cycle. It "could dampen the downward correction", Bruce said. "But I'm not sure this is a wise thing to do, although the market can handle an easing of lending standards." Norway, like Sweden, has imposed core capital requirements on its banks that exceed those set by European and international regulators. Lenders in Scandinavia's richest economy need to hold 10 per cent capital of their risk-weighted assets by July next year, compared with 9 per cent. The Basel Committee on Banking Supervision sets a 7 per cent minimum, due to be enforced from 2019. Finance Minister Siv Jensen has asked the Financial Supervisory Authority to evaluate the effects on banks and homeowners of guidelines in place since 2011 that limit mortgage lending to 85 per cent of a home's value.