26 May 2026
The global economy is affected by high uncertainty, partly due to the war in the Middle East and higher energy prices. At the same time, house prices continue to rise markedly in several parts of Denmark. Although homebuyers appear resilient, the risk outlook for the housing market has intensified. This is shown in Danmarks Nationalbank’s biannual analysis of financial stability.
In the housing market, warning signs have become more pronounced. House prices continue to rise markedly in Copenhagen, and there are indications that price increases have begun to spread to surrounding areas. Although homebuyers appear resilient overall, there are now clearer signs of a build-up of risks in the housing market. This is one of the main conclusions in Danmarks Nationalbank’s biannual Financial stability analysis, which was published today. The analysis assesses and provides recommendations regarding financial stability in Denmark.
“When prices rise so sharply, and we at the same time see signs that developments are increasingly driven by expectations, vulnerability to a later fall in prices increases. Moreover, we now see clearer signs that price increases are spreading beyond Copenhagen. It is therefore crucial that lending rules, which have contributed to the resilience homeowners have today, are not eased,” says Ulrik Nødgaard, Governor.
In recent years, the use of so-called mortgage-like bank loans has increased. This development should be seen in light of broader interest-rate developments, which have increased demand for variable-rate loans, as well as competition among banks in the housing-loan market.
“Although banks are currently granting more mortgage-like bank loans, this type of loan still accounts for a limited share of total housing lending. And when we look at the data, there are no indications of major differences in credit quality between mortgage-like bank loans and variable-rate mortgage loans. We do not assess that the current development in mortgage-like bank loans poses a threat to financial stability. However, as housing finance is important for the Danish economy, we will continue to monitor developments,” says Ulrik Nødgaard.
In today’s analysis, Danmarks Nationalbank also concludes that the war in the Middle East, higher energy prices, and geopolitical uncertainty increase the risk of sudden, sharp price declines in financial markets, which may spill over into Denmark's financial sector.
Banks’ profits remain high, providing a buffer to absorb losses. Profit is supported by a robust economy, but impairment charges may increase rapidly if the business cycle turns. Danmarks Nationalbank’s stress test shows that the sector as a whole can withstand a severe recession scenario. However, banks’ corporate customers could be affected in a risk scenario with significantly higher energy prices and rising interest rates.
The Financial stability analysis will soon be available in English at nationalbanken.dk.
If you are a journalist and have any questions, please contact Teis Hald Jensen, Communications and Press Officer, on +45 3363 6066 or at tehj@nationalbanken.dk.