The Norwegian State Housing Bank Summary of Activities 2011 June 2011
2 The Norwegian State Housing Bank (NSHB) is the main implementing agency of Norwegian housing policy on the national level. The focus of Norwegian housing policy has gradually shifted from general supply-side measures towards targeted measures aimed at providing housing for disadvantaged groups. The role of the NSHB has changed accordingly. Our main task today is to enable the municipalities to implement comprehensive, locally tailored policies to provide housing for disadvantaged groups. 1. The Norwegian State Housing Bank s strategic platform 1.1 Vision and values The vision for the NSHB is identical to the vision for Norwegian housing policy in general: Adequate and secure housing for all Our core values of openness, versatility and collaboration must be taken into consideration in all we do. 1.2 Objectives and strategies Main objectives A well functioning housing market. Increased provision of housing for disadvantaged groups in the housing market. An increased number of universally-designed homes and buildings. Strategies Further development and strengthening of the NSHB s role as a housing policy knowledge centre Achievement of results through collaboration with municipalities, other welfare agencies and quality conscious players in the home building industry Particularly close collaboration with municipalities facing extensive challenges in the field of housing for disadvantaged groups Allocation of resources to the field of social housing work through further rationalisation and digitisation of the administration of loans and other work processes Target groups of particular concern in 2011 are homeless people, newly arrived refugees and elderly people in need of care and adapted hosing.
3 2. Measures The Norwegian State Housing Bank s measures basically fall into two categories: financial measures (loans/ grants) and housing policy knowledge (development/dissemination). 2.1 Housing allowance Housing allowance is the main social housing measure for economically disadvantaged households, and helps households with low incomes and high housing expenses obtain and/or maintain satisfactory housing standards. The scheme is also aimed at adjusting differences in the housing expenses of low-income pensioner groups. The local authorities administer the housing allowance scheme jointly with the NSHB and are responsible for processing applications. In 2009, the housing allowance scheme was substantially expanded. A total of 136 000 households received housing allowance in 2009, and the number of recipients of such benefits increased to 150 000 in 2010 (about 7% of all Norwegian households). The figures below illustrate how housing allowance is targeted at low income groups. To mention one comparison, the average Norwegian household income is approximately 4.5 times higher than the income of households receiving housing allowance. After deducting the housing allowance, the recipients' housing expenses account for about 33% of their total income; the figure for the population as a whole is 31.2%. Monthly housing expenses before and after housing allowances 2010 NOK 10 000 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Disabled + 64 years/other pensioners Household without temporary Household without benefits Housing allowances Housing expenses
4 Households with housing allowances 2010 Household without benefits Household with temporary benefits + 64 years/other pensioners Disabled 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 Number of households 40 000 2.2 Grants The NSHB provides grants for several purposes, mainly aimed at providing housing for disadvantaged groups. The main grants are: - targeted housing grant for first home buyers (strictly means tested) and for municipal social housing (rentals) - research and development grant - investment grant for residential care homes and nursing homes Grants and subsidies from the Housing Bank 2010 and 2011 ( NSHB`s budget) 7000 Needs tested investment grant 6000 Mill. NOK 5000 4000 3000 2000 Competence First-home housing grants 1000 0 2010 2011 Housing allowance
5 2.2.1 Targeted housing grant The objective of the targeted housing grant is to assist especially disadvantaged households to obtain and maintain acceptable homes. Housing grants worth approximately NOK 821 million were given in 2010 to assist individuals own or rent a home, and to improve accessibility in the homes of the elderly, the disabled and lowincome families. Scarcely 50 % of these grants were directly allocated from NSHB to municipal rental homes. 2.2.2 Research and development grant The NSHB gives priority to improving skills and knowledge in the housing and building markets through our Research and development grant. The grant plays an important role in developing new methods and housing solutions for disadvantaged groups in general, and in the implementation of the National Strategy for Preventing and Combating Homelessness in particular. In 2010 the Research and development grand has been divided in two different grants: one for the field of social housing and one for the promotion of quality in building design. The emphasis of the grant for quality in building design is placed on promoting environmentally sustainable solutions and universal design. 2.2.3 Investment grant for residential care homes and nursing homes The investment grant for residential care homes and nursing homes was introduced in 2008. This scheme will be used for building and renovation of nursing homes and residential care homes. The grant is meant for persons in need of around-the-clock health and social services, independent of age and diagnosis. The objective is to establish totally 12 000 new care units by 2015. Recipients of first-home housing grants 2010 6,2 % 12,8 % 3,2 % 1,1 % 35,8 % 40,9 % Disabled Refugees Homeless First-time home buyers Low income households Re-establishments
6 2.3 Loans The Housing Bank has two different loan schemes, the Basic Investment Loan Scheme and the Start-up Loan Scheme. The Basic Investment Loan Scheme is mainly used to promote universal design and environmentally sustainable solutions in the housing and building sectors, and to finance the building/renovation of child care/nursery schools. The Start-up Loan Scheme is used to make it easier for first-home buyers to enter the housing market. The Basic Investment loans are given directly by the NSHB, while start-up loans are handled by the municipalities. Norwegian State Housing Bank Loans 2010 and 2011 (NSHB`s budget) 16000 14000 Ch ild care/nursery schools 12000 Mill. NOK 10000 8000 6000 4000 2000 0 2010 2011 Housing start-up loans Construction of housing and housing improvement 2.3.1 Start-up loans Both the NSHB and private lenders can provide basic loans. Start-up loans are supplementary financing from either lender and can be given to facilitate entry into the housing market. Start-up loans are primarily intended for first-home buyers who find it hard to get affordable loans on the private market, but can also be given to medium or low-income households with special needs. NSHB loans are distributed to municipalities lending to individuals and are used by the municipalities as tools for implementing their housing policies. The municipalities and the Government share Start-up loan credit risk, accepting 25% and 75% respectively of the risk on the residual loan. Interest rates and repayment terms on NSHB funds are in line with the general
7 terms and conditions applying to NSHB loans (see below). However, each municipality can decide the terms of payment on the loans it provides. For individuals who have special needs, housing allowances, targeted housing grants and start-up loans can be used in combination. The municipalities gave start-up loans to some 9500 households in 2010, about 62% of which were first-time buyers. Many single- person households and single parents have financed their first home through a startup loan. Recipients of Start-up Loans 2010 1,5 % 5,1 % 12,8 % 0,2 % Refugees Disabled 19,2 % Homeless 61,2 % First-time home owners Economically disadvantaged Re-establishments 2.3.2 Basic investment loans The NSHB basic loan scheme is aimed at promoting universal design and environmentally sustainable solutions in new and existing buildings. Basic investment loans can be given to both new buildings and home renovations. The scheme is also intended to contribute to a secure supply of housing outside the larger urban areas. Basic investments loans are first-priority mortgages in which the amount of the loan is based on the local housing market and the particular public goals attached to the individual project. The NSHB will continue to provide financing for homes in rural districts where it is difficult to obtain mortgages at reasonable rates on the capital market, and will also offer basic investments loans for priority housing rentals. In issuing loans, it is important for the NSHB to focus on environmental concerns, paying attention to sustainability within the home, housing quality, design and energy efficiency.
8 Increased attention is also being given to making more homes physically accessible and to promoting universal design in general. Home universal design costs are primarily lift installation and access modification, although higher space requirements can also raise project costs. The NSHB intends to make flexible use of its funds to reach its overall goals and to meet local housing market needs. To simplify basis loan administration, loans will be paid out in line with borrowers' requirements but within reasonable limits. 3. Other responsibilities The NSHB gives grants to municipalities and counties to cover the interest payable on building and renovating school buildings. Since 2004, the NSHB has had increased responsibility for financing student housing. Special grants for student housing are intended to improve the general accommodation rental market for young home-seekers. Since 2005, the NSHB has given grants to renovate church buildings. As of 2006 this scheme also includes grants for new church buildings. 4. Developments in the housing market Residential construction varies in line with the economic cycles. In Norway the number of projects started peaked in 2006, when more than 33 300 homes were built, i.e. 7.1 per 1000 inhabitants. The number of new-built homes have decreased to 21 100 in 2010.However, residential construction is expected to increase substantially in 2011. The average size of homes shows a considerable increase in the last years owing to changes in housing stock. The proportion of detached single-family homes has expanded as the proportion of multi-home buildings has shrunk (see Key Figures). Steadily rising house prices lead to increased house building but gradually rising interest rates have the opposite effect. In addition the financial crisis markedly effected residential construction in 2009 and partly in 2010. Because of less commercial bank lending activity, however, the role and importance of the NSHB s financing of new homes has expanded. The NSHB approved basic loans for the construction of approximately 4,400 new homes in 2010, contributing to the financing of 21% of all new homes built that year (27% in 2009 and 14% in 2008).
Key figures 2006 2007 2008 2009 2010 Norway Resident population in 1.000 per 31/12 4 681 4 737 4 801 4 850 4 920 Percentage housing investment of: Gross domestic product 4,3 4,6 3,9 3,3 3,1 Gross capital formation 22,7 22,3 18,8 15,3 15,6 Employment Total 1.000 2 362 2 443 2 524 2 504 2 508 Construction 167 180 183 178 179 Unemployment rate - all industries 3,4 2,5 2,6 3,2 3,6 Price- and building cost indices Consumer price index (1998 = 100) 117,7 118,6 123,1 125,7 128,8 Detached, single family homes (2000 = 100) 139,7 155,9 169,1 174,1 177,2 Building costs: Detached single family (2000 = 100) 122,6 132,7 139,8 143,3 148,0 Multi-dwelling buildings (2000 = 100) 126,1 133,7 141,9 144,8 148,9 Housing construction Number of homes, work started 33 300 32 500 25 500 20 000 21 100 Average net/utility floor space (m 2 ) - flats completed 102 102 103 121 Housing units 28 600 31 00 28 800 22 200 17 800 By type of building, pct: Detached single family 25 24 27 31 36 Houses with 2 4 dwelling units 28 15 25 27 34 Multi-dwelling buildings 47 61 48 42 30 The Housing Bank Participation in loan financing, number of dwellings The HB loans as pct of total housing loans 8,2 8,0 8,9 8,3 8,0 Basic construction loans, new houses 6 700 4 200 3 600 5 400 4 400 The HB participation as pct of total new dwellings 20 13 14 27 21 Average net/utility floor space (m 2 ) 80 83 94 84 90 Other loans, number of dwellings Start-up loans 1) 6 500 6 000 6 500 8 200 9 500 Home improvement loan 1 900 2 000 3 500 4 400 1 800 Loans for kindergartens (number of children) 7 900 6 400 8 000 5 500 4 100 Grants and subsidies (mill NOK) Total grants (excl.housing allowances) 3 007 3 944 3 522 3 474 3 214 Housing allowances 2 214 2 336 2 420 2 702 3 148 Notes 1) Norwegian State Housing Bank loans disbursed by the municipalities. Sources: Statistics Norway and the NSHB's Annual Report
10 5. FUNDING AND INTEREST RATES NSHB's annual budget is approved by the Storting (Norwegian Parliament). Budget appropriations include grants and administrative costs (losses included). The Storting sets an annual lending framework for the NSHB. Loans are funded by the Treasury and repaid at an interest rate calculated on the basis of a fixed rate covering the State s borrowing-costs + 0.5 percentage points. There have been no budget appropriations for home loans since 1996. NSHB mortgages are available at three, five, ten and twenty-year fixed or variable interest rates based on market rates. Observation periods mean that the borrower knows in advance what interest rates will apply in one or two months. At the end of 2010, the NSHB variable rate was 2.8% (i.e. around 1.3 percentage points below rates available on the private market). The Storting decides the principles on which the NSHB borrowing rate will be based. All customers pay the same interest rate, implicitly subsidising financially weaker borrowers when compared to the private sector. Most loans are repaid over 25 years, including an initial 5 years in which interest only is paid. Losses are at a historically low level. In 2010 losses amounted to approximately NOK 15 million, or 0.014% of the total loan portfolio. The NSHB`s floating and fixed interest rates compared to the commercial bank average Percent 9 8 7 6 5 4 3 2 1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 Floating interest Fixed interest Commercial average
The Norwegian Bank - account extracts The Housing Bank Rate of 2008 2009 2010 interest, pct. Mill NOK Mill NOK Mill NOK Balance sheets per 31.12 Total loan portfolio 100 646 104 216 108 338 Basic construction loans 70 511 71 778 72 703 First home/start-up loans 20 816 23 569 27 212 Renovation loans 9 319 8 869 8 423 Interest by loan categories Loans with special interest terms 0 5,4 2 246 1 907 1 696 Loans with floating interest rates 2,5 *) 48 589 40 387 44 060 Loans with fixed interest rates 2,7 5,9 50 114 62 260 62 794 Account extracts for 2007-2009 Disbursement of: New loans 12 158 12 566 12 896 Housing allowances 2 421 2 702 3 148 Housing grants 3 522 3 474 3 354 Interest expenditures 4 713 4 400 3 674 Administrative expenses Interest subsidies (loans prior to 1996) 21 18 18 Administration incl. losses 312 315 334 Losses 10 14 15 Losses in pct of total portfolio 0,010 0,013 0,014 Financial means Repayments and payment of principal from borrowers 8 096 8 549 8 823 Interest receipts - loans 4 692 4 382 3 656 *) Average rate in 2010. The floating interest rate was 4,3% in 2009 and 5,5 % in 2008
HB 3.E.1 Published by The Housing Bank June 2011 Printrun: 1500 Graphic production: RenessanseMedia AS The Norwegian State Housing Bank Strategy Office Felles postmottak 8002 BODØ Tel.: + 47 815 33 370 Fax.: + 47 32 26 27 00 www.housingbank.no