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Housing Finance Market Overview

In Denmark, housing finance is mainly raised from specialised mortgage banks and retail banks. The mortgage banks hold a share of around 90 per cent in terms of home loans balances. The housing finance market has seen a moderate growth since the year 2000. The mortgage debt to GDP ratio increased from 71.2 per cent in 2000 (an already comparatively high level) to 92.8 per cent in 2007.

The Market from the Perspective of the Demand Side

In Denmark, the usual maximal loan-to-value ratio (LTV) amounts to 80 per cent. In 2007, the most popular type of loan was the loan with a fixed interest rate (54 per cent), followed by capped variable interest loans and interest reset loans (each 23 per cent). All interest on debt is tax deductible up to a certain limit.

House Price Development

House prices have risen fast since the year 2000 with an average annual growth rate of almost 10 per cent till 2007. Therefore, in the course of the financial crisis, house prices have already sunken from the middle of 2007 to the end of 2008 with a decline of the price of one-family houses of 6 per cent and of apartments of even 20 per cent.

Refinancing Instruments

The mortgage banks and banks refinance their activities on the mortgage market almost exclusively with the issuance of realkreditobligationer (Covered Bonds). Funding mortgage loans through Covered Bonds is legally constrained by a LTV limit of 80 per cent.


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