The National Bank of Denmark published an analysis of proposals to ease home financing for younger households, including allowing pension savings to be used for home purchases. It concludes that easier financing would mainly increase housing demand and house prices, so the net gain in younger homeowners would be small if the housing stock does not expand. The analysis links the affordability debate to a period of rising prices and a falling share of first-time buyers, particularly in larger cities, and notes that 18–35-year-olds accounted for 37 per cent of home purchases in 2022. It highlights how additional funds can be amplified by lending rules, including the 5 per cent down payment requirement and mortgage financing of up to 80 per cent of a property’s value, and presents example calculations for financially constrained first-time buyers up to age 35. In capital municipalities, assumptions producing house price increases of up to around 6 per cent result in slightly less than 40 additional younger households becoming homeowners, while a similar number of other first-time buyers are displaced; the paper also flags potential spillovers to higher gross household debt and a shift of wealth from pension schemes to housing, with implications for risk and resilience.
National Bank of Denmark 2025-02-25
National Bank of Denmark analysis finds pension-funded home purchases would raise house prices and add few new young homeowners
The National Bank of Denmark's analysis suggests that using pension savings for home purchases would mainly boost housing demand and prices, with minimal net gain in younger homeowners if the housing stock remains unchanged. The report highlights the impact of lending rules and potential spillovers, including increased household debt and wealth shifts from pensions to housing, affecting risk and resilience.