Statistical news focuses on the latest figures and trends in Danmarks Nationalbank’s statistics. Statistical news is targeted at people who want quick insight into current financial data.
Corporate clients now pay higher interest on bank loans than private customers
The banks' lending rates have risen sharply since June 2022. During that period, the average interest rate on the corporate clients' loans in Danish kroner has risen by 3.9 percentage points. It is approx. 1 percentage point more than for private customers. Corporate clients' interest rates overtook private customers' interest rates in the summer of 2023. This has not been observed before. Corporate clients' average interest rate is 0.10 percentage points higher than private customers' interest in February 2024. The higher interest rate increase for corporate clients is due to, among other things, corporate clients' higher share of debt, where the interest rate is linked directly to a reference rate, and the banks' restraint to increase interest rates on certain types of private customers' loans.
Businesses now pay a higher interest rate than private
Note:
Private customers are defined as 'employees, pensioners etc.' (p.1430). Corporate clients consist of 'non-financial companies' and 'personally owned companies' (S.1100+s.1410). The calculation behind the annual effective interest rate does not take leap years into account. This means that the calculated interest rates for February 2024 are overestimated by approximately 0.2 percentage points. Find chart data here
The share of debt with reference interest matters
The interest on a significant part of the customers' debt is linked to reference interest rates, which generally follow the development in the money market. These reference interest rates have increased significantly since the summer of 2022, and therefore the interest rates on loans to customers have increased accordingly. How large a share of the customers' loans is with a reference interest rate is therefore important for the development in the customers' average interest rate. Loans with reference interest make up 55 per cent of corporate clients' outstanding bank debt and 34 per cent of private customers' outstanding bank debt. Corporate clients' larger share of loans with a reference rate has thus, all things being equal, contributed to the fact that corporate clients' interest rates have on average risen more than private customers' since the summer of 2022.
The banks are reluctant to increase interest rates for private customers
The interest rate on private customers' loans has increased by almost 3 percentage points on average since summer 2022, while market interest rates have increased more. Approx. two-thirds of private customers' loans are not linked to a reference interest rate, and thus the banks themselves regulate interest rate changes for this part of their lending. The smaller interest rate increase, seen in relation to corporate clients, indicates that several banks have chosen not to pass on the entire interest rate increase to customers on selected loan types. Several banks, for example, have omitted co-operative housing loans and green car loans when they have announced that they are raising interest rates.1