Grunnfinansieringen

Grunnfinansieringen refers to a type of funding used in Norwegian mortgage financing, specifically a combination of government-backed and direct subsidies provided to borrowers. In essence, it means the costs of a loan are not entirely borne by the borrower, but are also shared between the private sector and the public sector.

This system was implemented as part of the Norwegian government's overall effort to create an affordable housing market, especially during the post-war period following World War II. The primary intention was to encourage more people to take out mortgages, thereby increasing access to credit and social mobility. Under this system, borrowers who opt for a special type of fixed-rate mortgage at around 1-2% interest pay lower loan costs, while the remaining costs are split between the government and private parties.

As a result, a broader pool of potential borrowers emerges, allowing many individuals who might otherwise struggle to obtain a mortgage to do so. This has greatly contributed to Norway's accessible and social housing efforts. Meanwhile, banks and other financial institutions can still participate in the mortgage market knowing they have a reduced risk due to the revised calculation of the accrued expenses.

Additionally, the more favorable conditions reduce the burden of a mortgage on a homebuyer's total expenditures, making rent and homeownership more affordable for low-income people. Over time, the policy has ensured a certain exigency, although rigor and behavioral changes; affordability has strengthened for entitled policy holders. The continuing tailored measures support a critical understanding and reception for housing finance at three governmental policies introduced since the post-war period.