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MONEY

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.

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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

How you can help Denmark design its new bank notes?

Denmark is in the process of designing its new banknotes, and nearly 70,000 people have already shared their opinions. Here's how you, too, can contribute.

How you can help Denmark design its new bank notes?

Currently, Danish banknotes feature images of bridges and ancient finds. In the past, they have showcased prominent figures such as authors and scientists.

However, from 2028-29, the new banknotes could depict themes of everyday life, flowers, and the sea on one side, while the other side will feature famous Danes and their achievements.

That’s why Danmarks Nationalbank, the country’s central bank, is now encouraging the public to contribute ideas for the new banknotes via their questionnaire.

Public input collected via questionnaire

Participants who take part in this questionnaire can suggest themes which fit these categories (flowers, everyday life, and the sea) or nominate notable Danes.

During the first 14 days of the feedback period, 68,000 people had already completed it, providing input on the future look of the country’s currency.

Niels Kaas, the Chief Cashier of Danmarks Nationalbank, told DR he was surprised and satisfied with the high level of participation, noting that this input is highly valuable.

Dual focus: Security and aesthetics 

The redesign aims to enhance security and prevent counterfeiting.

As Kaas said, banknotes serve as both a means of payment and a work of applied art. This dual function requires a focus on both security and aesthetics in the design process.

While Denmark’s central bank will handle the security aspects, the aesthetics are open to public input.

The bank has also received over 150 proposals from 41 educational institutions and museums specialising in cultural and natural sciences.

To have your say in the design of Denmark’s new banknotes, visit Danmarks Nationalbank’s website and complete the questionnaire by June 2nd.

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