ABSTRACT
At the time of writing all of the Nordic countries are struggling with the consequences of the US banking crisis. The crisis, created partly by the housing finance boom in the United States, has upset the whole of the global financial order. This has repercussions that concern very crucially the housing sector and especially home ownership in Nordic countries (Denmark, Finland, Iceland, Norway and Sweden). The most extreme example of this is to be found in the smallest of these countries, Iceland. In recent decades Iceland enjoyed a rather spectacular economic success that was brought to an end with the crisis in the private banking sector. When the economic boom came to an abrupt end this meant severe problems not only for Icelandic businesses but also for those indebted homeowners whose loans were in foreign currency. With the loss of value in Icelandic currency the cost of mortgage debt went up suddenly, thus increasing almost overnight the debt load of indebted households. In none of the other Nordic countries have the repercussions of the financial crisis been so dramatic as in Iceland. However, severe economic volatility has also been experienced in the other Nordic countries. Redundancies, temporary dismissals, closing down industrial plants and problems in the construction sector, as well as temporary house price decreases, have also happened in these countries. An increase in homeowners’ debt and repayment arrears is also a possibility, through either rising unemployment or rising mortgage interest and declining equity values. However, on the whole the scale and nature of influence of the global financial turmoil on home ownership and housing in the Nordic countries cannot be readily observed, and is as yet not well researched.
