Daily Northern

Nordic News, Every Day

Menu

Norwegian government eases mortgage requirements amid rising debt concerns

Wednesday 4th 2024 on 07:23 in  
Norway

The Norwegian government is easing certain mortgage requirements, a move that may be welcomed by many. However, the Financial Supervisory Authority, responsible for maintaining economic stability, has expressed concerns over rising debt levels among Norwegians, who are among the world’s highest in terms of personal debt. Since 2015, strict lending regulations have been in place to address this issue.

Starting January 1, homebuyers will only need to provide a 10% down payment, allowing them to secure loans covering up to 90% of a property’s price. Other existing lending regulations, such as the cap on borrowing at five times annual income, will remain unchanged.

In support of this decision, Finance Minister Trygve Slagsvold Vedum emphasized the government’s goal of helping more citizens achieve homeownership, particularly those without substantial financial support from their parents. He believes that reducing the down payment requirement could stimulate the construction of new housing, underscoring the importance of owning a home as a fundamental value.

Despite criticism from the Financial Supervisory Authority and consumer advocates, Norges Bank has approved the government’s move. Some economists suggest that it’s time to reconsider the down payment requirement, arguing that it disproportionately impacts lower-income individuals.

The backdrop of these changes is a notable rise in housing prices, making it increasingly difficult for many, particularly younger buyers, to enter the market. Many are relying on parental support to gather the necessary down payment, highlighting an ongoing issue within the housing market that needs addressing.

As the government facilitates easier access to loans, concerns remain about whether this will further inflate housing prices in a climate where new housing construction is lagging.

Source 
(via nrk.no)