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.
Many homeowners may face higher interest rates
The interest rate level in autumn will be important for the approximately one third of homeowners who have variable interest rate mortgage loans. These homeowners stand to receive a new interest rate before the end of the year. If you compare with the mortgage loans paid out in May, the impending interest rate adjustment in the second half of the year may well become an expensive affair for some homeowners, as the interest rates on these new loans have been higher than the interest rates on most homeowners' existing loans. However, most homeowners who will receive a new interest rate have loans with a short interest rate or F1 loans, which are close to the current interest rate level.
The interest rate on new mortgage loans is significantly higher than on existing ones for some loan types
Note:
The figure shows the debt-weighted effective interest rate (excluding contributions) on new mortgage loans paid out to Danish private customers (sector 1430, DK, DKK) in May 2024 as well as existing mortgage loans divided into selected types of interest rate fixing. The category 'Short interest rate' covers loan types with interest rate fixing every 3 to 6 months, where the interest rate is linked to the CIBOR or CITA interest rate.
More than 300,000 homeowners will get a new variable interest rate this year
By the end of 2024, 311,000 homeowners will have gotten a new variable interest rate on their mortgage loans, which make up a bit more than one third of homeowners' total mortgage debt with variable interest rate. Hereof, most will receive a new interest rate on the 1st of July.
For homeowners with short interest rates or F1 loans, the impending interest rate adjustments are not that dramatic, as they have already had their interest rates adjusted one or more times since interest rate increases took off in 2022. However, there will also be some homeowners who currently have an effective interest rate that is significantly below the current interest rate level. These are primarily homeowners with loans that have an interest rate fixation period of 3 years or longer, i.e., loans which were taken out or most recently adjusted during the period of low interest rates, and which therefore have not yet been adjusted after interest rates have risen significantly. Compared to the effective interest rates on new F3 and F5 loans paid out in May, both of which were above 3 percent, these homeowners thus face a significant increase in their interest expenses – even if they choose to change their interest rate fixation period in connection with the interest rate adjustment.
Many mortgage loans still have an interest rate of less than 2 percent
Considering the entire population of Danish homeowners’ mortgage loans, many loans still have an interest rate well below the current interest rate level. Thus, over 40 percent of their mortgage loans have an interest rate excl. administration rate of less than 2 percent. More than half of them are fixed interest rate loans, where borrowers are not automatically exposed to interest rate adjustments. The remaining mortgage loans with a low interest rate, on the other hand, can all look forward to having the interest rate on their mortgage loan adjusted sooner or later.
The biggest adjustment will take place in 2026 when over 100,000 homeowners with a current interest rate of less than 2 percent will have the interest rate on their mortgage loan adjusted. By the end of 2027 almost all mortgage loans with a variable interest rate below 2 percent will have been adjusted.