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.
The potential for buyback of mortgage bonds remains significant
The buyback potential in 30-year fixed-rate callable mortgage bonds continues to be substantial. As of October 2023, 70 percent of the callable bonds had a price below 90, equivalent to over kr. 680 billion of the outstanding amount, with kr. 582 billion and kr. 323 billion trading below kr. 80 or kr. 70, respectively. Despite large numbers of buybacks in the second half of 2022, many borrowers still have the opportunity to buyback the bonds behind their loans at a significantly lower price than the nominal value, thereby reducing their debt.
The share of callable bonds trading below kr. 90 remains significant
Note:
Outstanding amount (nominal value) of 30-year fixed-rate callable mortgage bonds.
Decreasing buyback interest in 2023
The average price of outstanding mortgage bonds with amortisation has been around 82 throughout 2023. The price of interest-only mortgage bonds has, on average, been even lower. However, the buyback interest in mortgage bonds has been lower in 2023 compared to 2022. This is particularly true for bonds with the option of a 30-year interest-only period, where repurchasing has been modest. When refinancing fixed-rate loans, it should be noted that the interest on the remaining debt increases when refinancing into a new loan. Moreover, switching to variable-rate mortgage loans exposes one to interest rate risk. Additionally, there are costs associated with refinancing.
Prices are lowest for interest-only bonds
Note:
Weighted average price of outstanding amount of 30-year fixed-rate callable mortgage bonds.