Blunt stats: 39% of full-time pensioners in Norway still repaying housing loans

[Sjalabais]

New statistics were presented today* that I figure are quite an eye-opener: I wouldn't have expected so many people getting that far in life and still owing parts of their living quarters to a bank.

How does this work in your neck of the woods?

The Norwegian National Institute for Consumer Research found that of the people who draw a full time pension, a staggering 39% are still repaying their housing loans. This is a trend that has been rising significantly over the last 10-12 years. Elderly people do, of course, spend more years in pension, as the pension age hasn't risen in tact with rising life expectancy. But the trend is two-fold, some elderly spending bank money to keep their houses and apartments up-to-date, and thus keeping a loan "alive" and active, while others take out "seniority loans". This is weird stuff: For every year that passes, they receive money equivalent to a share of their house's value. Living rights on their property are valid until their life's end either way, and the money stops coming once the property is wholly bank owned.

Some more survey stats:

• 20% of those aged 25-34 do not expect to have paid off their loan before age 60.
• 42% of those aged 35-44 do not expect to have paid off their loan before age 60.
• 52% of those aged 45-54 do not expect to have paid off their loan before age 60.
• 61% of those aged 55-66 do not expect to have paid off their loan before age 60.

The trend here is that as pension age comes closer, more and more people see that they won't be debt-free as pensioners. That's sort of scary.

House prices have been rising exhorbitantly, and 2 out of 3 Norwegians own a cabin, too.



* > News article behind a paywall, click it if you find this topic interesting and want to support the paper with a tiny ad handout.

[boarder42]

i plan to carry a mortgage in retirement.  i dont know how rates work in norway but if rates are anything like they are today in the states i may move houses just to take out a new 30 year loan.

[2lazy2retire]

i plan to carry a mortgage in retirement.  i dont know how rates work in norway but if rates are anything like they are today in the states i may move houses just to take out a new 30 year loan.

I could not believe that you could fix a mortgage rate for 30 years in the US , max UK side was 10 years.

[Sjalabais]

I guess the average rate is hovering around 3% now, we were at 2.5% when we paid off our debt.

To me, this isn't just about rationality (make your money work etc), but also about knowing that you don't own your house just yet. to me, this has always felt a bit like a defeat.

[RetiredAt63]

I am retired and I still have a mortgage.  I have the pension income to carry it, it is not a concern.

Here the mortgage rates are only locked in for 5 years, so if they are higher when my term ends I will pay down the mortgage.

What concerns me more, in a general way, is reverse mortgages.  If you need money enough to take out a reverse mortgage on your house (as opposed to a HELOC), then maybe it is time to look at the overall financial picture.

[Rezdent]

I see two different topics in the OP.

First is that elderly people are tapping their equity in their home via bank or seniority loans...in the US we have something called a "reverse mortgage" that is similar.  I believe doing this is almost always a bad idea, but I am seeing more of it.

The second is the survey stats, which appear to rely on self-assessment by participants?  I feel that younger people who have recently took on those notes have more confidence of paying it off before 60...and the older they get, the more they realize it isn't going to happen.

[boarder42]

I guess the average rate is hovering around 3% now, we were at 2.5% when we paid off our debt.

To me, this isn't just about rationality (make your money work etc), but also about knowing that you don't own your house just yet. to me, this has always felt a bit like a defeat.

this is an emotional attachment i dont really process (my wife says i'm like sheldon on the big bang theory)  i see everything in  terms of the best logical decision and "konwing" i own my home gives me no satisfaction if i "knew" i was wasting that money.  I could own my house 2x over right now with my retirement savings but there is not a financial point to that.

[Jack]

i plan to carry a mortgage in retirement.  i dont know how rates work in norway but if rates are anything like they are today in the states i may move houses just to take out a new 30 year loan.

+1. I'm 31 and refinancing to a new 30-year fixed before interest rates rise, so it won't be paid off until I'm 61. And if interest rates are low in the future I'd happily refinance again.

However, purposeful arbitrage between mortgage rates and stock market returns is not why most seniors still have mortgages. Instead, they have them (and especially reverse mortgages) because their retirement income isn't "enough" (in quotes because we know they're probably wasting money in their budget somewhere) for them to live on so they're forced to tap into their home equity. That is a problem.

I'm particularly skeptical about reverse mortgages, both because it harms inter-generational transfer of wealth (which is good unless there's a lot of wealth to transfer, in which case it should be highly taxed to prevent the establishment of an aristocracy... but I digress) and -- more importantly -- it combines a mortgage with the characteristics of an annuity, which is opaque enough that it's hard to gauge how bad the homeowner is getting screwed on the deal.

[Landlord2015]

Tjena Norge! Kul att det fins andra norbor på forumet!

Well after my Swedish language comment(Swedish is almost like Norway language) I continue in English so everyone can follow. I am from Finland (Europe).

I was out of curioisity thinking of investing in Norway, but a decent very small apartment say in Oslo the capitol of Norway meant for 1 person can cost 300 000 euro+++++ and the sky is the limit.

Of course I saw a document where they in New York USA buy luxury apartments for many millions of dollars 350 000 euro is small money.

My point being the apartment prices still are more expensive in Norway then many other countries. I have talked with wealthy Norweigan people who own only one apartment in Norway since it is so expensive, but then they don't always are the summer woodcottage in Norway wilderness type you mentioned. Many Norweigan people also own property abroad since they think other European countries have cheap apartments compared to Norway. It is more then that it can be nice to have a warm summer village in south of Europe.

I respect Norway people and I met friendly Norway tourists while I myself was tourist in Tallinna Europe. Anyway when I was friendly towards the group from Norway and greeted them with fluent swedish then one of them said after a short while I pay for your drinks this evening/night!

Being a Finn, but knowing that Norway people can be very rich I asked still politely thanks, but is there no limit what I can order in drinks?

The wealthy Norway dude who apparently wanted to be cool said: No limit!

Now I do know USA and Canadian people can be very wealthy but it is not common in my experience you offer for free without limit drinks a person you meet first time unless it is some kind of dating attempt which this clearly was not.

I found this thread interesting, but I would find even more interesting if we would have stats of Norway apartment prices... If your apartment costs 1000 000 euro oh my I still have 200 000 euro mortgage left that makes the Norway people still wealthy/rich.

My respect to Norway people.

[Landlord2015]

On the other hand my first post was more for those who have good career in Norway and good cashflow.

What happens in Norway if you become long term unemployed? Norway is extremely expensive country.

This banks taking over mortgage is scary indeed but I understand Norway older people. Do they wanna live like poor in Norway trying to pay of the mortgage during their last years?

That means once again world is grey there is no perfect country.
Very interesting this means I might be much more wealthy then many Norweigians once I retire after decades.

[Landlord2015]

I checked and this pension loan system you mentioned is not so rare. We have basically same system in Finland, but I have no statistics.

I am not either some super workhorse I might as well decide screw this saving for next generation and sell one of my apartments. However since I get rent income not doing it currently at least.

[Sjalabais]

The average price of self-owned apts in Oslo per square meter is 62130 kr as of 3rd quarter 2015. That's 7175$ - it's pricey and in accordance with the graph above, that shows how prices have grown in a spectacular fashion. Buying apartments in Berlin, Nice and other popular tourist spots, in order to rent them out to other Norwegian's at high prices, is indeed popular.

[Landlord2015]

The average price of self-owned apts in Oslo per square meter is 62130 kr as of 3rd quarter 2015. That's 7175$ - it's pricey and in accordance with the graph above, that shows how prices have grown in a spectacular fashion. Buying apartments in Berlin, Nice and other popular tourist spots, in order to rent them out to other Norwegian's at high prices, is indeed popular.

It must be some kind of trust issue among Norweigans that they only trust Norway? When I sold Magic The Gathering cards this year buyers from Finland, Denmark and Sweden contacted me. From wealthy Norway no contact whatsoever.

One Finnish buyer did rise above them all and did buy those(I have never owned all) Power 9 cards from me for 6000 euro though I still sell Magic The Gathering cards and I have sold overall cards this year for more then 10k euro.

I also play Magic The Gathering still you see there are many formats of rules and in all formats the P9 cards are not allowed.

Magic The Gathering has globally during year 2015 over 20 million active registered competition players and I am one of them.

Magic: The Gathering - Inside the World's Most Played Trading Card Game:
https://www.youtube.com/watch?v=Plr81gaUIr0
The above video is from 2014 and in the video is ALPHA POWER 9 cards which are even more expensive then my Unlimited cards that I sold(I never owned all of them).

This would not work in Finland well. I am not super expert on Germany except I share many of its values and morals(not Merkel politics) and would like to visit Germany for example Berlin myself one day.

In Finland those who want to rent short term usually do not tell me many months before. In addition they are so frugal so they don't wanna pay the electrical bill of opening a rental apartment unless it is for very long term 6 months or longer. Fins don't take 6 months vacations.

This vacation renting I have thought about that but really do not work out for Finns. Unlike USA and Canada posters here Finnish people are NOT allergic to Motels. Swedish typical motel with 16-40 people sleeping in same room sound horrible to me. Yeah we have that kind of motels also but I am talking about a motel for say 2 person room and then you share that with a friend. If you bring women i.e ladies in which I did it still usually works out if your friend is good and he used to that kind of behavior.

That a Finn would began some kind of holiday renting abroad to other Finns sounds absurd unless it is a pure hotel. Yes there are Finnish landlords that rent abroad ,but they will mostly seek some good long term rental and not even try for some Finnish holiday traveller.

[Landlord2015]

Hmm lets take stress test....

Say 56 squaremeters which could be apartment for 2-3 persons:
56*7175$=401 800 $. I get headic of currency so lets assume same in euro.

401 800 euro...

Well yeah fairly expensive, but (even I and I am not millionaire) and many other landlords own more real estate value then that. Will I be debtless when I hit pension age? We will see, but NO if I buy more say buy more investment apartments or start a firm then no. It is so long time and temptation is to invest more, but if I only try to kill debt and not buy more then yes very likely can I be debtfree when I hit pension age.

[canadian bacon]

"Say 56 squaremeters which could be apartment for 2-3 persons"

Huh?  I guess I may be out of touch but 600 sq is typically considered a small apartment.  This size is typically a studio apartment or a very small 1 bedroom.  I wouldn't expect a second bedroom in a apartment of that size

I spent time working in Oslo and it is really expensive!  I remember my parking at the hotel was $80 a night. 

I felt that retiremement and saving money wasn't a consideration at all to the people I met there.  I made more than them, I lived on less than they did, I saved more than them, and I spent more time thinking about retirement expenses

[Landlord2015]

"Say 56 squaremeters which could be apartment for 2-3 persons"

Huh?  I guess I may be out of touch but 600 sq is typically considered a small apartment.  This size is typically a studio apartment or a very small 1 bedroom.  I wouldn't expect a second bedroom in a apartment of that size

I spent time working in Oslo and it is really expensive!  I remember my parking at the hotel was $80 a night. 

I felt that retiremement and saving money wasn't a consideration at all to the people I met there.  I made more than them, I lived on less than they did, I saved more than them, and I spent more time thinking about retirement expenses

How big apartments are in Canada that I have no clue of. That said for heaven sake 56 square meters is usually 2 room+kitchen room separate and in some occasiions even 3 rooms+ kitchen. Of course there are those apartments that do not have separate kitchen room.

600 square meters? Are you drunk? Eh or Canada odd logic I have this HUGE apartment and I wonder WHY it costs so much to warm it up???:):):).

Look this was not meant as an insult to you or Canada people. I like Canada people and many of them like icehockey as do I like watching icehockey.

I am talking about a city apartment not some apartment in the wilderness.

600 square meters? I have only one multimillionaire friend and yes he has very big apartment indeed, but I doubt he has 600+ square meters and he likes modern apartments.

Look there are multimillionaires with even a medieval castle, but unless you are multimillionaire 600 squaremeters is over the top huge apartment.

You also said 600 squaremeters is small apartment?! I am talking about meters and not some squarefeet and no I am not talking about some wooden cottage up in the Canada mountains.

Using calculator:
600 square meters which is 6458.35 square feet is small apartment accoding to you.
56 square meters which is 602.779 square feet is an apartment meant for 2-3 persons according to me though if you have small children even a big family could live in that. I am sure many families still accept 56square meters even when the children grow up due to tough economic circumstances.

A big doctors house in a town could be for example 160+ square meters 1722.23 square feet( which is about 5 rooms + kitchen + cellar+ balcony etc.).  I should know and my father while he lived was a doctor.

Please note that in northern Europe we never count balcony area to the squarefeet or squaremeters. Therefore a big doctor's house can be 160 square meters or 1722.23 squarefeet+the balcony area.

[Asdfg]

Landlord, take it easy :)

Canadian bacon meant 600 square feet which is about 60 square meters. In Finland, where Landlord is from, a 60 square meter apartment is usually two rooms, small kitchen and a bathroom.

To the OP. Thanks! Interesting read. Like others in this thread, I can see my self in the same boat. My mortgage is currently at 0.1 %, so there is no point in paying it back any faster than required by the bank.

I think some European banks (in Sweden?) are proposing even longer mortgages, up to a 100 years if I'm not mistaken.

[Sjalabais]

How did you get a 0.1% mortgage? Do you own the bank? =8^)
Having visited relatives in Canada, a lot of space is really one distinguishing factor - in houses, and outside.
@Canadian Bacon, what did you do in Oslo? I absolutely agree that a lifelong attachment to the labour market, and compulsory spending through ones entire life, are very much Norwegian traits. Self-perception may be different, and such a generalization will, of course, have a lot of exceptions. But I still find it hard to talk about our financial priorities because people simply just don't get it; and who wants to talk money anyway?

[GoldenStache]

It has been some years but had a friend living in Vienna that planned on taking out a 60 year loan, only way he could afford the payment and still be in the area that he HAD to live in.  Moving was "not possible," and he laughed at the thought that Americans would be willing to move 10 miles to be closer to work.  Kind of the old school European mindset that I enjoy seeing from time to time.  I also have a friend that took out a 99 year lease in London and friend that took out a 99 year lease on a reservation in the states.  I know leases are different than mortgages but still something to think about.   

[Landlord2015]

Landlord, take it easy :)

Canadian bacon meant 600 square feet which is about 60 square meters. In Finland, where Landlord is from, a 60 square meter apartment is usually two rooms, small kitchen and a bathroom.

To the OP. Thanks! Interesting read. Like others in this thread, I can see my self in the same boat. My mortgage is currently at 0.1 %, so there is no point in paying it back any faster than required by the bank.

I think some European banks (in Sweden?) are proposing even longer mortgages, up to a 100 years if I'm not mistaken.

What 0.1%? Do you know there is for example 3-12 months eurorbor+the bank marginal? Could the bank owner be your father and you get 0% marginal and 3 months eurobor?

My mortgage rates are 1.25% and 1.64% and they are not fixed rate mortgage. In those percentages that I have are both the bank marginal and 6 months eurobor included. I have 6 months eurobor for both of my mortgage loans.

Size for the 2 persons in Finland can be between 44-60 square meters that is the norm. Howwever size for 3 person can be between 55-80 square meters it varies.

I know Sweden it is highly socialistic state with hating landlords and capitalistis ways. They have had law changes in Sweden and it is not possible anymore to get a 100 year loan(30 is likely maximum nowadays). Sweden usually they buy something odd like boenderätt right to live in the apartment it is like owning 10-20% of the apartment and then they still pay almost as much as renters do. Yes of course there are capitatlistics excpetions in Sweden, but those people are a minority.

To the OP. In Sweden they HATE if you talk about economics. About Norway I don't know, but Finland is more capitalistic then Sweden. In Finland money and investing are not forbidden subjects.

Of course there exist very capitalistics people in Sweden and left socialistic people in Finland, but this as a general rule that Finland is more capitalistic then Sweden in culture. I have lived and worked 2 years in Sweden and I have relatives also in Sweden.

[Asdfg]

How did you get a 0.1% mortgage? Do you own the bank? =8^)

I renegotiated my mortgage during a period when the local banks where competing furiously. And now with reference interest rates valued in the negatives, this is the result. Best part is, the bank can't do anything about it. The bad part is that the bank is showing absolutely zero empathy towards me. They are charging me for everything else they can, knowing that if I were to switch to another bank, my costs would go up a lot.

[Landlord2015]

How did you get a 0.1% mortgage? Do you own the bank? =8^)

I renegotiated my mortgage during a period when the local banks where competing furiously. And now with reference interest rates valued in the negatives, this is the result. Best part is, the bank can't do anything about it. The bad part is that the bank is showing absolutely zero empathy towards me. They are charging me for everything else they can, knowing that if I were to switch to another bank, my costs would go up a lot.

You still have record low mortgage rate that is not normal, but theoretically possible yes.

What makes me smile is that I get 100% tax refund for those interest ratest that I pay for mortgage since they are INVESTMENT apartments. You do get roughly 60% tax refund from interest from mortage in Finland if the mortgage is for own use.
==>
It does not matter if you have 0.1% and my higher has 1.64% due to tax refund. There are extra bank fees and for those you do not get any tax refund in my country Finland.

Finland still has high taxes and for landlord income in Finland there is 30% tax, but that is reducted from gross income after many expenses for the apartment is subtracted.

In additon to any USA, Canada and Norway posters we in Finland do NOT have super salary. None of my friends execept my richest friend(who is multimillionaire) has an income like 100k-150k/year from their work that I see some posters telling in these forums.

You have super salaries and low income tax in USA.

[canadian bacon]

Landlord2015:   Sorry about being confusing, yes I translated the 56 squaremeters to square feet but left out the "feet".  56 square meters is approximately 600 square feet. 

For the record I have a house that is about 930 square feet for my family of 4 so not all north american houses are castles.

It seems that I got a bit off of the real topic though, this subject should not be a apartment size debate that I started.

I think what I really wanted to say is that because there is a sense of security in the socialized medicine and care for the elderly in many of the european countries, this confidence may not lead to a drive to build up retirement accounts and the citizens may be more likely to bring a mortgage into their retirement without concern.  Meanwhile in the USA, there is a distrust on where the social care system will be in the future and so there is more of an encouragement to build up the funds to support yourself because you cant trust anyone else to help you.  With that being said, a majority of the US population are worried but still do not have retirement funds or plan. 


Just found this from 2014 time magazine showing a disturbing trend:
Among homeowners 65 and older, 30% had mortgage debt in 2011, vs. just 22% with mortgage debt in 2001, the CFPB found. The trend is more extreme among those 75 or older, where 21.2% had mortgage debt in 2011, vs. just 8.4% a decade earlier. The numbers have come down only marginally since 2011. Meanwhile, the typical amount of retiree mortgage debt has soared 82% to $79,000 from $43,300.
 

[Asdfg]

I think what I really wanted to say is that because there is a sense of security in the socialized medicine and care for the elderly in many of the european countries, this confidence may not lead to a drive to build up retirement accounts and the citizens may be more likely to bring a mortgage into their retirement without concern.  Meanwhile in the USA, there is a distrust on where the social care system will be in the future and so there is more of an encouragement to build up the funds to support yourself because you cant trust anyone else to help you.  With that being said, a majority of the US population are worried but still do not have retirement funds or plan. 

This is very true. Sometimes it feels like they are the two extremes. American model gives you lots of freedom and good chances for profit, while the European model gives you basically no freedom but guaranteed low profit.

Also in some countries the government doesn't have that much money "in the bank", so the pension for the old people is being paid directly by the ones still working. Now, the concern is that the number of working people is getting lower while the amount of people being taken care of by the social security system is getting bigger (increasing average age, immigrants, unemployment). I reckon currently one worker is supporting 3 non-working persons.

[Landlord2015]

True Asdfg you hit the nail on immigrants that suck economy.

While risking going to politics this has to be said.

Europe is getting tired of Merkel(Germany leader) politics of more
immigrants. Slowly but streadily time passes and the popularity of Merkel goes down even in Germany.

Look I understand why USA take immigrants. USA does not have the carebear system there are even homeless people in USA(unfortunately actually I would wish better circumstances including less study fee for USA people).

Finland is capitalistic the 3 biggest parties in Finland government are right now are:
The Center party called funnily MEGALOMANIA party, but actually the leader Sipilä the Prime Minister does his best. Siplilä is an entreprenur himself so in year 2016 they will slowly start to help more entreprenurs with less bureaucrazy if nothing else. This year has mostly been about budget cuts and reform of the hospital system to a more effective system and less costly and that reform will continue next year when it will perhaps gradually be implemented.
The second biggest party are called true Fins. They are highly against refugee immigrants those reugees particularly who are not useful. Workers like doctors, nurses and other high educated worker people are of course welcome. They are also a bit antigreen party they highly support nuclear power. I voted for this party. They also want to reduce bureacraucy for entreprenurs. They wanted an increase in police force(many unemployed police get back their jobs).
Third biggest party in Finland government is the Coalition party. They are highly capitalistic and while they are in power landlords will always get full tax discount from interest rates. They are also very positive towards EU and NATO.

My party is a bit divided(neutral) about EU and NATO, but I am positive towards them both.

Now these three parties are in POWER in Finland currently. Approximately 30-40% of the immigrant refugees that has come to Finland will stay rest will be deported out as it should be.

Now what parties are in Sweden? Well more socialistic for sure, but Europe in general is getting tired of Merkel immigrant politics.

All of Finlands 3 parties wants more budget to military, but we still have small budget for military compared to USA even if talking about % of the whole budget.

In 2016 will likely happen lawchanges in Finland due to what tragedy happened in France. Nice though that Russia is allied with Europe vs terrorists.

[Sjalabais]

I renegotiated my mortgage during a period when the local banks where competing furiously. And now with reference interest rates valued in the negatives, this is the result. Best part is, the bank can't do anything about it. The bad part is that the bank is showing absolutely zero empathy towards me. They are charging me for everything else they can, knowing that if I were to switch to another bank, my costs would go up a lot.

It is still absolutely amazing! We have negotiated a lot of our terms, too, but the wiggle room was nowhere near what you achieved. The Central Bank's interest is about 1% and the lowest mortgage rates that I have heard of are just below 2% - assuming you have all your business at the bank in question, with considerable assets managed by them.

Just found this from 2014 time magazine showing a disturbing trend:
Among homeowners 65 and older, 30% had mortgage debt in 2011, vs. just 22% with mortgage debt in 2001, the CFPB found. The trend is more extreme among those 75 or older, where 21.2% had mortgage debt in 2011, vs. just 8.4% a decade earlier. The numbers have come down only marginally since 2011. Meanwhile, the typical amount of retiree mortgage debt has soared 82% to $79,000 from $43,300.

Very interesting, thanks a lot for this back-to-topic info. The rates appear to be significantly lower than in the Norwegian case, but they're still higher than I had expected before I heard about it myself. Even though things aren't that black-and-white anymore, you're right about state pensions and health care. Everybody who has been connected to the labour market gets a minimum pension in Norway, and health care is essentially free. Even though, it is very common to save for a private market pension in addition; that's my perception at least. No numbers.

[Landlord2015]

Whatever I don't wanna live in Norway or Sweden.

What do you use your money for then in Norway if studying is almost free and hospital is free?? Food of course and some use alocohol and I guess what people shop clothes, books, movies, cinematickets, theater, but there is a difference what you can legally buy.

There is still significant law differences between Finland to Sweden and Norway.

Prostitution is illegal in Sweden and Norway:
https://en.wikipedia.org/wiki/Prostitution
It is legal in Finland as it should be:)

Oh it is illegal in Russia, but that is funny many eastern countries
have it illegal but police don't care except rarely for show.

There are more prostitutes in Russia then Finland and a considerable amount of the prostitutes come from Russia to Finland.

Once again Finland is closer to Germany culture and in second world war we were allied with Germany though we knew we had to fight Stalins Russia anyway.

Oh I have met Norway tourists and some of them are of course sex tourists, but whatever I have Roman morals and think it is ok.

Anyway since food and all other stuff is darn expensive in Norway it is no wonder Norway people think naturally holidays are not expensive if they go to another country.