The History of the Norwegian State Housing Bank

The Norwegian State Housing Bank was established by the Parliament on 1 March 1946.

The housing situation was precarious in the districts and towns at both the turn of the previous century and the inter-war period. There was an overwhelming lack of housing at the end of Second World War, and in northern Norway a part of the country had been razed to the ground and had to be rebuilt. As long as there was also a lack of private credit, it was natural to establish a state-owned housing bank.

The Norwegian State Housing Bank was established by the Parliament on 1 March 1946 "to provide central and local government support for reconstruction and new building.” Since its foundation, NSHB has remained the Norwegian government’s most important tool to implement its housing policy and has played a key role in the development of the Norwegian welfare state.

1946–1953 Reconstruction and New Building
The purpose of NSHB was to finance housing at a modest but good standard at a reasonable cost. A considerable effort was done, especially in particularly war damaged areas but it took time to gain momentum due to a lack of building materials. Home construction did not take off on a large scale until the 1950’s but by the end of this initial period, NSHB had financed the construction of a total of 110 000 buildings.

1954–1964 Credit allocations and control
From 1954 the budget set out binding framework for NSHB's activities. Housing purposes, through NSHB, was a priority area for channelling credit. Access to building materials improved, and there was a boost of activity during this period in which NSHB played a vital role and financed 170 000 homes during this 10-year.

1965–1970 Rationalization of Home Building
Home building increased, in part, due to the utilization of industrial production methods. The private sector grew stronger; peoples’ income and preferences changed and the demand for access to private credit sources increased. As the private investments in the housing sector increased some of NSHB’s loans remained unused. In spite of this NSHB financed the construction of 146 000 homes in six years.

1971-1980 Years of Expansion
The 1970s were expansionary, but full of challenges. High inflation resulted in significant increases in building and site costs and many people struggled with housing costs. NSHB gradually directed its initiatives towards rehabilitation of the existing housing stock. Norwegian home building peaked in 1973, when nearly 45 000 homes were completed. Around 70 percent of these homes were financed through NSHB, which financed a total of nearly 300 000 homes during this period.

1981–1988 Deregulation of the Housing Market
NSHB introduced loans with interest steps which became the dominating loan scheme all the way until 1996, but the loans were no longer issued on as favorable terms as previously. Around 130 000 homes were financed in the period, of which 5 000 were older buildings. NSHB expanded its range of operations and also made a major contribution to the planned urban regeneration measures implemented during this period.

1989–1995 Debt Crisis and Readjustment
The 1990’s started with an economic downturn and the collapse of the private banking system. Many customers were beset by financial problems, and the banks suffered large losses. Again NSHB was used to counteract the business cycle and financed nearly all home building.

1996–present From Housing Bank to Welfare Institution and Center of Expertise
NSHB is moving its business away from the financing of new homes towards helping the disadvantaged in the housing market. Loans are issued without subsidies, while grant schemes and housing allowance are aimed at specific groups.

The basic loan scheme replaced the construction loan and the improvement loan in 2005, and has a greater focus on universal design and the environment. The Housing Bank helps meet the requirements of the government's plan for the elderly by financing nearly 40 000 homes for the elderly in local authorities and nearly 3 500 homes organized under the guidance of psychiatric authorities. The start-up loan was developed together with the local authorities and the private banking industry and launched in 2003. It provides young people and the disadvantaged with an opportunity to establish themselves in their own homes.