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Interest rates could see more hikes in Denmark after latest raise

An expert has warned that interest rates may not have peaked in Denmark after the central bank, Danmarks Nationalbank, put its rate up.

Published: 16 December 2022 17:54 CET
Interest rates could see more hikes in Denmark after latest raise
Higher interest rates can mean increased payments for flexible mortgage holders. Photo: Thomas Lekfeldt/Ritzau Scanpix

The Danish central bank, Nationalbanken, raised its lead interest rate on Thursday night by 0.5 percent to 1.75 percent.

The national bank thereby follows the adjustment made by the European Central Bank, ECB, which raised its own rate earlier on Thursday to 2 percent.

Nationalbanken has raised Denmark’s central interest rate four times this year.

The raised interest rate means that people who have variable rate mortgages could find themselves paying more for their loans.

“The market is accounting for more increases now, and that is noticeable,” Danske Bank senior economist Las Olsen told news wire Ritzau in a written comment.

Thursday’s raised interest rate means the interest on loans is now at the highest level for 13 years, according to Ritzau.

But more increases are yet likely.

“We are going into 2023 with an outlook of even more interest rate increases,” Arbejdernes Landsbank senior economist Jeppe Juul Borre told Ritzau.

Around 200,000 homeowners are due to see new interest rates set on their flexible rate mortgages later this month. The new increase in interest is unlikely to mean good news for the homeowners, Borre said.

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PROPERTY

Why Danish house prices have climbed to ‘Covid-era levels’

A consistent upwards trend in house prices in Denmark in recent months has seen properties reach their highest values since the middle of 2022.

Published: 11 June 2024 10:14 CEST
Why Danish house prices have climbed to ‘Covid-era levels’

The Covid-19-hit years of 2020 and 2021 saw house prices saw in Denmark before a cooling-off period which began in 2022, but property prices have begun to recover towards the previously high levels, real estate site Boligsiden reports.

Data from estate agents collated by the media show the trend of rising prises.

House prices increased by 1.2 percent between April and May with both detached and semi-detached houses having gone up every month this year.

That has brought the average house price in Denmark to its highest level since September 2022.

“Overall we have today a housing market which is doing well and is in better shape than many of us expected,” Boligsiden’s director and real estate economist Birgit Daetz told news wire Ritzau.

A primary reason for the trend is a stable financial situation in many Danish households, she explained.

High employment, salary increases related to inflation, and savings levels are all relevant factors.

“Additionally, interest rates were recently cut and that will have a positive effect on the property market, all else being equal,” Daetz said.

“This is why the expectation is also for house prices to increase further in the coming period,” she said.

READ ALSO: How Danish mortgages could be affected by ECB interest rate cut

In contrast to houses, apartments have seen a more restrained price trend, in part due to the impact of new property taxes on valuations.

Nevertheless, apartments also saw a 0.5 percent increase in average price between April and May.

“The apartment market has surprised us recently because it has had the biggest property tax increases. That’s why the expectation was that prices would fall as a result,” Daetz said.

“But in the last few months we have also seen increasing trades and prices on apartments. The relatively low supply also plays a role here because there seems to be demand for the few apartments that go on the market,” she said.

READ ALSO: Denmark’s new property tax rules from 2024

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