Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
The Danish mortgage bond market is dominated by few market participants
The Danish mortgage bond market is robust but the liquidity is affected by interest rate fluctuations. At the same time the market is characterised by the fact that it consists of a few large market participants that could potentially influence the market significantly through large-scale divestments. The big investors are however also diverse, and in recent periods of stress, their opposite trading interests have reduced the risks.
Key messages
Why is it important?
A well-functioning Danish mortgage bond market is important for financial stability in Denmark. It reflects that Danish mortgage bonds are issued daily to finance property purchases for households and businesses. Financial entities, such as banks and pension funds, also use mortgage bonds to allocate liquidity and as an important part of their liquidity reserves. Their market behaviour affects the liquidity of mortgage bonds and thus how robust and well-functioning the Danish mortgage bond market is.
Main chart
The mortgage bond market is concentrated among a limited number of market participants, with 8 market-makers as intermediaries
Note:
The chart shows the market participants that accounted for more than 0.5 per cent of purchases in the secondary mortgage bond market in 2023. The thicker a line is, the more trading activity it indicates. A circle next to a sector indicates trades between companies in the same sector.
Source:
MiFIR data and own calculations.