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Interest rate cuts lead to new Danish ‘super loans’

As a knock-on effect of the Danish central bank’s repeated interest cuts defending the krone’s link to the euro, Danish homeowners are now being offered historically low mortgage loans.

Published: 6 February 2015 14:29 CET

Interest rate cuts lead to new Danish 'super loans'

Photo: Martin Ballund/Scanpix

Nykredit bank announced on Friday that it is creating a new 30-year mortgage loan with just 1.5 percent interest. Realkredit Danmark and BRF quickly followed with their own 1.5 percent loans.

The move came one day after Nationalbanken cut its interest deposit rate — for the fourth time in less than three weeks — by 0.25 percentage points to -0.75 percent.

“Nationalbanken is turning the knobs on interest rates to defend the krone exchange and that is benefitting Danish homeowners and businesses,” Nykredit’s Sune Worm Mortensen told TV2 Finans.

It was just a few weeks ago that Danish banks began offering two percent loans, which according to financial daily Børsen has set off the biggest loan conversion rush in a decade.

“We can see that the interest fall is continuing. And we could very well see that on the two percent loans today,” Mortensen told Børsen.

But even though the bank is now offering 1.5 percent loans, Nykredit is recommending that borrowers stick to the two percent loan so long as its market value doesn’t exceed 100.

Nykredit expects that the new 1.5 percent loan will open with a market value of around 96.5 but warns that it could climb higher as a result of Nationalbanken’s latest cuts.

Danish interest rates are determined by the supply and demand of the bond market. According to the Association of Danish Mortgage Banks (Realkreditrådet), “this is unique by international standards and doesn’t form part of the mortgage system of any other country in the world.”

The Association of Danish Mortgage Banks has a short film that explains Denmark’s mortgage system that can be viewed here.

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How to ensure your French property is insured for storm damage

In the wake of Storm Ciaran, thousands of property owners in France are preparing insurance claims – with initial estimates of the bill for damage between €370 million and €480 million.

Home insurance is compulsory in France, whether you own the property you live in or you rent – and it must include some level of storm damage cover.

Check also to see if your insurance provides cover in case of a declaration of a catastrophe naturelle.

The garantie tempête (storm guarantee) covers damage caused by violent winds. What constitutes a ‘violent wind’ varies from contract to contract, but there appears to be a widespread consensus of agreement on wind speeds over 100km/h.

In most insurance contracts, this covers damage caused by the storm and within the following 48 hours – so you’re covered if, for example, a tree weakened by the storm comes down within that period and damages your property.

Be aware that, while the storm guarantee automatically covers the main property, it generally only covers any secondary buildings and light constructions – such as a veranda, shed, solar panels, swimming pool or fence – if they are specifically mentioned in the contract.

The same is true of any cars damaged by debris. A basic insurance contract might not include storm damage, so it is always worth checking.

Damage must be reported to your insurer as quickly as possible. The deadline for making declarations is usually five days after any damage is noticed. This is especially important for second home owners, who may not be at the property when the damage occurs.

In some cases – such as in the aftermath of Storm Ciaran – insurers may extend the reporting period. But under normal circumstances, it’s five days after the damage has been discovered.

What happens next

To make a claim, the first thing to do is contact your insurer by phone or email. Your insurer will take you through the next steps, but usually you have to send in a declaration – which should include an estimate of any losses and for any repairs, with evidence where possible, such as photographs and any receipts for purchases.

Your insurer may also request proof of wind intensity, which can be provided for example by a nearby weather station.

The insurance company may appoint an expert to come and assess the damage, so make sure to keep damaged property safe until they arrive, as well as all invoices for any urgent repair work.

What if you’re a tenant?

If you rent your property, you must report any damage inside the accommodation to your insurer and also notify your landlord so that they can file their own claim.

In the case of a co-propriete, you must declare damage inside the accommodation to your insurer, while the trustee sends his own declaration to the collective insurance (which sometimes covers the private areas) .

How long does it take for claims to be settled?

Payment of the compensation provided for by the “storm guarantee” depends your home insurance contract. After the insurer has estimated the amount of damage, compensation is generally paid between 10 and 30 days following receipt of the insured’s agreement.

What if we got flooded?

In the case of flooding, you may have to wait for a natural disaster order to be issued.

Catastrophe naturelle

The ‘state of natural disaster’ is a special procedure that was set up in 1982 so victims of exceptional natural events, such as storms, heavy rain, mudslides and flooding, as well as drought, can be adequately compensated for damage to property.

The government evaluates each area and deems whether it qualifies for the status of catastrophe naturelle (natural disaster).

Essentially once a zone is declared a natural disaster, victims can claim from a pot of funds created by all insurers. If the zone is not declared a disaster, insurance companies are under no obligation to pay out.

Under a “state of natural disaster” residents are covered for all those goods and property that are directly damaged by the phenomenon, in this case storms.

It applies to residential or commercial buildings, furniture, vehicles and work equipment that are already covered by insurance policies.

Homes must be already covered by a multi-risk insurance policy for the status of natural disaster to count.

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