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.
Higher rates on mortgage loans after adjustment
The average interest rate excl. administration rate on the home owners' mortgage debt was at the end of January 2023 at 1.71 per cent. This is 0.97 percentage points higher than a year ago, of which a full 0.39 percentage points of the increase occurred during January 2023. The higher interest rate means that the home owners' interest expenses (before tax) have increased by almost DKK 10,000 on average per borrowed million in the past year.
The average interest rate (excl. administration) on Danes' mortgage debt has risen significantly
Note: The blue series shows the annualized agreed rate on Danish home owners' (Households – Employees etc.) mortgage debt in percent. The purple series shows how many percentage points the average interest rate has changed compared to the same period the previous year.
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With the latest increase, the average interest rate has almost doubled since mid-2022, reaching the highest level since 2015.
Rate adjustment has contributed to the increase
The significant increase in the average interest rate in January is mainly due to the large amount of variable rate mortgage loans, which received a new interest rate at the start of the year. Here, the interest rates for almost a fifth of the home owners' mortgage debt were adjusted.
Approximately 90 per cent of the loans that received a new interest rate in January are variable interest loans with a very short interest rate adjustment period. The loans follow a reference interest rate and thus typically receive a new interest rate every 6 months. For home owners with these loans, the interest rate will have increased by approx. 3 percentage points since mid-2022.
The increase in the average interest rate is also affected by the replacement of existing loans with lower interest rates for new loans with higher interest rates. It can either be new home owners or current home owners who have changed homes or converted their loans.
The same development also applies to businesses
The interest rate adjustment of variable-rate loans at the start of the year has also increased the average mortgage lending interest rate for businesses. Here, an increase of as much as 0.67 percentage points in January 2023 contributed to the interest rate rising to 1.71 per cent. The large increase is connected to the fact that companies more often have variable rate mortgage debt. Therefore, the interest on almost 36 per cent of the companies' mortgage debt was adjusted at the start of the year, corresponding to DKK 480 billion.