The History of the Norwegian State Housing Bank

The housing situation was precarious in both rural districts and towns at the turn of the twentieth century and during the inter-war period. There was a severe housing shortage at the end of the Second World War, and in Northern Norway, parts of the country had been razed to the ground and had to be rebuilt. As private credit was also scarce, it was considered natural to establish a state-owned housing bank.

The Norwegian State Housing Bank (NSHB) was established by 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 instrument for implementing 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 of a modest but good standard at a reasonable cost. Considerable efforts were made, particularly in heavily war-damaged areas, but it took time for reconstruction to gain momentum due to shortages of building materials. Large-scale housebuilding did not begin until the 1950s. 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 onwards, the national budget established a binding framework for NSHB’s activities. Housing, financed through NSHB, was prioritised in the allocation of credit. Access to building materials improved, and construction activity increased significantly during this period. NSHB played a vital role and financed 170,000 homes over these ten years.

1965-1970: Rationalisation of home building

Housebuilding increased partly due to the use of industrial production methods. The private sector grew stronger, people’s incomes and preferences changed, and demand for access to private credit increased. As private investment in the housing sector grew, some of NSHB’s loans remained unused. Despite this, NSHB financed the construction of 146,000 homes over a six-year period.

1971-1980 Years of expansion

The 1970s were a period of expansion, but also of considerable challenges. High inflation resulted in significant increases in building and land costs, and many people struggled with housing expenses. NSHB gradually directed more of its efforts towards the rehabilitation of the existing housing stock. Norwegian housebuilding peaked in 1973, when nearly 45,000 homes were completed. Around 70 per cent of these homes were financed through NSHB, which financed a total of almost 300,000 homes during this period.

1981-1988 Deregulation of the housing market

NSHB introduced loans with stepped interest rates, which became the dominant loan scheme until 1996. However, loans were no longer issued on terms as favourable as before. Around 130,000 homes were financed during this period, including 5,000 older buildings. NSHB also expanded its range of activities and made a major contribution to planned urban regeneration measures.

1989-1995: Debt crisis and readjustment

The 1990s began with an economic downturn and the collapse of the private banking system. Many customers faced financial difficulties, and banks suffered substantial losses. Once again, NSHB was used as a counter-cyclical instrument and financed nearly all housebuilding activity.

1996-2013: From Housing Bank to welfare institution and centre of expertise

NSHB shifted its focus away from financing new homes and towards assisting disadvantaged groups in the housing market. Loans were issued without subsidies, while grant schemes and housing allowances were targeted at specific groups.

In 2005, the basic loan scheme replaced both the construction loan and the improvement loan, with a greater emphasis on universal design and environmental considerations. The Housing Bank contributed to meeting the objectives of the Government’s policy for older people by financing nearly 40,000 homes for elderly residents in municipalities and almost 3,500 homes developed under the guidance of psychiatric care authorities.

The start-up loan scheme was developed in cooperation with municipalities and the private banking sector and launched in 2003. It gave young people and disadvantaged groups an opportunity to enter the housing market.

2014-present: Strengthening the social housing mission

Since 2014, the Housing Bank has sharpened its focus on assisting disadvantaged individuals and families in the housing market. The Bank was assigned a central role in coordinating the national housing initiative Housing for Welfare (2016–2020). This was followed by a new Government strategy for social housing policy for 2021–2024, which further reinforced the Housing Bank’s social mandate.

At the same time, responsibilities relating to the environment, energy and building practices were transferred to the Directorate for Building Quality (DiBK).

Digital transformation also became a key priority. In 2014, the first online application service for housing allowances was launched. This was followed by new, user-friendly digital services for applying for loans and grants. Municipalities were also provided with more efficient digital tools to support case management. In 2016, the Housing Bank launched an online guide — a digital toolbox designed to support municipalities in their housing-related work within the wider welfare system.

As part of the municipal reform in 2020, several grants for individuals were transferred from the Housing Bank’s budget to the municipalities. Meanwhile, the Bank continues to finance housing for priority target groups, including municipal rental housing, care homes, nursing homes and student housing, on a large scale. In recent years, the Housing Bank has also prioritised housing initiatives in rural districts, including through targeted subsidy schemes.