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Interest rate spike to affect thousands of Danish homeowners from the New Year

Hundreds of thousands of homeowners with CITA loans will have to pay a higher interest rate from the New Year. For most, the increase will be around 2.4 percentage points.

Published: 27 December 2022 15:21 CET
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Starting from the New Year, many homeowners with so-called CITA loans will see a notable increase in their interest rates. Photo by Bruce Mars / Unsplash

Realkredit Danmark and the Danish bank Arbejdernes Landsbank announced the news on Tuesday after a new interest rate was set for the loans of around 200,000 homeowners.

In the so-called CITA loans, the interest rate is adjusted every six months according to what is called the CITA interest rate. The new interest rates come into force on January 1st, 2023.

FlexKort loans at Realkredit Danmark and F card loans at Totalkredit both fall under the said category.

Historically high interest rate level

According to Arbejdernes Landsbank, the new interest rates from the New Year will be an average of 2.9 percent. Before the New Year, it was 0.5 percent.

The lowest interest rate from the turn of the year will be 2.74 percent, while the highest interest rate will amount to 3.16 percent.

The interest on the loans will thus end up at the highest level since they were introduced in 2013, according to the chief economist at Arbejdernes Landsbank Jeppe Juul Borre.

At Realkredit Danmark, approximately three out of four borrowers will end up with an interest rate of just under 3 percent.

There, it has been calculated that the new interest rate will total between 2 and 3 billion kroner in interest payments for Danish homeowners next year.

“It is something that the individual borrower can naturally feel at a time when there is already pressure on the household budget from high inflation.

“Ultimately, this will also hurt activity in the Danish economy,” chief economist at Realkredit Danmark Christian Hilligsøe Heinig said, according to DR.

The fight against inflation

The rise in interest rates is due to the central bank raising interest rates in an attempt to bring down inflation.

The rising interest rate is supposed to lead demand to fall.

“This is a sign that when we see monetary policy tightening, it is something that affects companies and households very directly,” chief analyst Sune Malthe-Thagaard at Totalkredit said, according to Ritzau.

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MONEY

Vipps MobilePay: Will cross-border payments be rolled out across the Nordics before the summer?

2024 is turning out to be a big year for e-payment apps across the Nordics, but is there any chance that you will be able to use Vipps MobilePay across borders before the summer starts?

Published: 23 May 2024 15:12 CEST
Vipps MobilePay: Will cross-border payments be rolled out across the Nordics before the summer?

The landscape of e-payment solutions is growing rapidly in Scandinavia, spurred on by the increased reliance on digital transactions, particularly during the COVID-19 pandemic.

IN NUMBERS: How close is Denmark to becoming cash-free?

Among the players driving this transformation is Vipps MobilePay, the result of the 2022 merger of Norwegian e-payment giant Vipps and Danske Bank’s MobilePay, which has set ambitious goals for delivering a unified platform that can be used throughout the Nordic region.

But will consumers in Norway, Denmark, and Finland see the rollout of Vipps MobilePay before the summer begins?

New apps in Finland and Denmark

Since the merger of Vipps and MobilePay in 2022, the combined company has been working towards creating one app and one technological platform that can serve users across the Nordic countries.

In Finland, a significant milestone was achieved on January 23rd this year when the new MobilePay app was unveiled to 2.6 million Finnish users.

With the Finnish implementation completed, the focus shifted to Denmark, where a new version of the MobilePay app was rolled out to 4.5 million Danish users on March 12th, signalling a significant milestone, and setting the stage for simpler cross-border payments within the Nordic region.

While some hiccups were reported in the Danish media following the move – and in the run-up to it – the migration was broadly seen as a success.

With the March migration, some 11.5 million users in Norway, Finland, and Denmark were united, setting the stage for potential cross-border payments in the near future.

A broader Nordic rollout before the summer?

If all goes according to plan, according to Rune Garborg, CEO of Vipps MobilePay, consumers can expect to use Vipps MobilePay across Norway, Denmark, and Finland before the summer arrives, with Sweden potentially following shortly after that.

This anticipated rollout is part of a series of launches planned for 2024, including cross-border payments and the introduction of tap-to-pay functionality for iPhone and Android.

“This and much more will make us fit for competition with the world’s biggest tech brands that have all moved into the payment sphere,” Garborg said in a March press release.

MobilePay: What is it, and how do I use it?

The MobilePay app provides a straightforward mobile payment solution for consumers in Denmark.

It allows them to carry out transactions directly from their smartphones, converting their devices into digital wallets.

With roots in person-to-person transfers, MobilePay has expanded its reach to include physical stores, online retailers, and mobile applications, solidifying its position within Denmark’s payment landscape.

To use MobilePay, you need to download the app and link it to your bank account or bank card. This setup enables painless fund transfers and payments, including contactless transactions, using NFC technology.

Considering the widespread adoption and popularity of MobilePay in Denmark, you might wonder whether the country is close to becoming cash-free.

However, although app payments are commonplace and almost all businesses accept debit cards, one in five people in the country still say they would find it difficult to be without cash.

To learn more about Vipps in particular and where and how you can use it in Norway, check out The Local’s explainer on the e-payment app.

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