What is the new loan proposed by the government? 

The new startlån, or “help-to-buy” loan for first-time-buyers is a loan of up to 500,000 kronor, according to a press release issued on Monday.

The loan will be provided by banks or mortgage companies, but guaranteed by the Swedish National Board of Housing and Planning, Sweden’s state housing agency. 

Couples will be able to receive a maximum of 250,000 kronor each, as will single people without children. Single people with children will be eligible for the maximum startlån of 500,000 kronor. 

The guarantee would allow banks or mortgage companies to loan out up to 95 percent of the value of a property to first-time buyers, rather than the 85 percent maximum allowed under a cap set in 2010. 

A proposal for the loan was presented to Sweden’s housing minister, Johan Danielsson, by the report’s author Eva Nordström.

Nordström was appointed on December 3rd, 2020 to lead an investigation into measures which might make it easier for first-time buyers to purchase a home. 

The proposal is now being sent out for consultation. After the last responses come in by August 26th, the government will draw up a proposal to be sent to parliament. 

Who is eligible for the new “help-to-buy” loan? 

Nordström argues that the loan should be available to all first-time buyers of houses in Sweden, and not just to young people, as some have suggested.

She argues limiting it to young people would leave out other groups priced out of the housing market, such as refugees and other recent immigrants to Sweden, and others who have lived in rental apartments for a long time and wish to own their own property. 

“People who are new in Sweden have a similar situation as young adults, particularly if they have come as refugees,” she writes.

“Like young people, the group has frequently not had the possibility to buy a home earlier on the Swedish market at a time when the entry price was lower.” 

In the scheme, she proposes that the category of “first time buyer” should include everyone living in Sweden who has not owned a property in the country in the past ten years. Those who have owned properties in other countries should still be eligible, she proposes, a it will, in practice, be too difficult to check property ownership outside of Sweden.  

She argues that everyone who has a personal identity number, or personnummer, and who is folkbokförd or “resident” in Sweden should be eligible for the startlån, as these are the only requirements typically made by Swedish mortgage providers. 

How will the scheme help first-time buyers? 

Nordström estimates that the scheme will reduce the amount of time it takes to save up the cash needed to take out a mortgage by about two thirds. She argues that it is not reasonable for people to have to save up for more than five years to build up sufficient cash to take out a mortgage. 

Won’t the scheme simply push up prices and add to first time buyers’ debt? 

That’s what Sweden’s tenants rights organisation, Hyresgästföreningen, argues is the evidence from other countries which have tried similar schemes. 

In a press release, it argued that similar schemes in Norway, Australia, the UK and Canada, had tended to simply push up the prices of housing, benefitting building firms, but not first-time buyers. 

“All experience shows that if you give people more money in a market, then prices just go up and the threshold is only further increased,” the organisation wrote. 

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