Government to Lower Requirements for Mortgage

Photo : Bjørn Inge Bergestuen. Finance Minister Siv Jensen

Last week, the government issued its new guidelines for prudent residential mortgage lending practices. They retain the general requirement on equity of 15 percent, but request banks to follow a more flexible policy.

– The Ministry clarifies that in some cases, there may be prudent to provide mortgages to first-time home buyers with equity down to ten percent, writes the Ministry of Finance in a press release.

Jensen notified that she would like to see banks in some cases also provide loans to those who have not managed to save up 15 percent of the purchase value. She also makes it clear that mortgages should be provided to borrowers with equity down to ten percent if the borrower has satisfying financial potential, says Jensen in the press release.

Before the election the bourgeois parties had promised to lower equity requirements for homebuyers from 15 to ten percent. But it did not happen, and the housing industry has accused the government for breach of promise.

According to Finance authority assessment, the banks are already flexible when it comes to the requirement of equity. Authority warns, however, against the government proposal to lower the requirement. House price growth has long been a key driving force in the Norwegian economy’s growth. 

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