Many will probably cheer for that. But Finanstilsynet, which ensures that the Norwegian economy remains stable, has warned against this. For years, the Norwegian Supervisory Authority has worried that Norwegians are at the top of the world when it comes to debt. This is one of the reasons why we have had a lending regulation since 2015, which has set strict requirements for those who wish to buy a home. Now, however, the government imposes one central requirement: from 1 January you need 10 per cent equity, and can thus borrow up to 90 per cent of the purchase price. Recently, it has become very expensive to buy a home in Oslo. Photo: Rolf Petter Olaisen / news But most of the other requirements for getting a home loan – such as not being able to borrow more than five times your annual income – will remain as before. Vedum: – Makes life better Finance Minister Trygve Slagsvold Vedum (Sp) thinks this is a very good measure. – As a government, we want to make it possible for as many people as possible to own their own home, even if mum and dad don’t have a lot of money to help you on your way into the housing market, says Vedum to news on Wednesday morning. Vedum says they hope that lowering the equity requirement will mean that more new homes are built. – Owning your own home makes life better. It is an important and fundamental value that I, as finance minister and Sp-leader, am passionate about, says Vedum. – Norway is among the world’s most indebted nations. Now it’s just going to be easier to get more debt. Is it so wise? – The debt ratio has only decreased in recent years. Then we must remember that it is important that as many people as possible have the opportunity to own their own home. This must be done safely, there must still be a very clear equity requirement of 10 per cent, says Vedum. Green light Although both Finanstilsynet and the Consumer Council are critical and think this only makes matters worse, Norges Bank has given the green light to what the government should now do. LO and several economists have also thought that it is high time to do something about the equity requirement, which many think looks very odd and anti-social. Some have thought that even more rules should be relaxed, or that the entire regulation should be removed. – We can’t have a state that meddles too much in people’s private finances, said Jan Ludvig Andreassen, chief economist in the Eika group, in August. Does it lead to even higher prices? The backdrop for the changes in the lending regulations is that historically high housing prices in Norwegian cities have made it very difficult for many, especially young people, to enter the housing market. Several are dependent on their parents to get enough equity. Facts about the lending regulations The lending regulations were created in 2015 with the aim of reducing the strong house price growth and household debt, when we were in a period of low interest rates and when people built up a lot of debt. The regulations set requirements for how banks can lend money. The rules set requirements for the customer’s ability to pay, the customer’s total debt in relation to income (debt ratio) and the size of the loan in relation to the home’s value (loan ratio). Those who take out loans must accept an interest rate increase of three percentage points, and at the same time an interest at least 7 percent. This was changed in 2022. Previously, you had to accept an interest rate rise of five percentage points. You can borrow a maximum of five times gross annual income. You can only borrow 85 percent of the purchase price of a home, which means that you must have 15 percent equity Those who have taken out a loan that is more than 60 percent of the value of their home, are forced to pay installments on the loan every month. The banks have a flexibility quota which means that in 10 per cent of loan applications they can offer loans beyond the rules laid down in the regulations. In Oslo, the quota is 8 per cent. The regulation has been revised and passed on several times. Today’s lending regulations apply until 31 December 2024. Source: The Government Now, the government is therefore opening up so that people can borrow more money. But won’t that just increase house prices even more, especially since new houses aren’t being built every day? Housing policy spokesperson Siri Gåsemyr Staalesen in the Labor Party asked the question earlier this autumn, and said it is very important that more housing is also built. Senior manager Erna Solberg said earlier this autumn that today’s high interest rates alone would limit the indefensible appetite for loans. Published 04.12.2024, at 07.00 Updated 04.12.2024, at 07.17
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The government lowers the equity requirement to 10 percent – news Norway – Overview of news from different parts of the country
