The Effect of Credit Constraints on External Financial Support: Implications for Young Home Buyers in Norway : An empirical study of how the Norwegian Financial Supervisory Authority’s introduction of a down payment requirement affected “curling”, an external form of financial support for young homebuyers, in the period 2005 - 2020

2023

In this study, the effect of the Norwegian Financial Supervisory Authority’s introduction

of a down payment requirement on the extent of parental help young people received to

access the housing market in Norway, a phenomenon referred to as “curling”, is investigated.

To carry out the study, microdata from Statistics Norway ranging from 2005 to 2020

with a selection of people in the age span 20 to 40 years is used. The data is utilized to

construct the dependent variable, “curling”, to determine whether parental help has found

place. Heterogeneity is examined using regression models to uncover demographic trends

in parental help.

There is a remarkable increase in curling during the transition from the period before

the down repayment requirement to the time after the implementation. The findings

indicate that the introduction of a down payment requirement has increased parental help

of young people by as much as 18.53 percentage points for them to access the housing

market in Norway. The extended analysis of heterogeneity supports this claim and reveal

demographic trends of curling that favour Norwegian individuals of the male gender and

their economic advantage in terms of education and income in the occurrence of curling.

Particularly noteworthy is the causal effect exhibited by the down payment requirement

in Oslo, which demonstrates a 14 percentage points higher impact compared to the rest

of the country over a decade.