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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

Denmark’s MobilePay app now lets you send money to Norway

Users of Denmark’s MobilePay payment app can from Wednesday send money to people in both Norway and Finland, in the first step towards enabling international transfers with the app.

Denmark’s MobilePay app now lets you send money to Norway

MobilePay’s owner Vipps MobilePay said in a statement on Wednesday that international transfers were now available to the two Nordic countries.

“Our vision is to offer the simplest and most user-friendly option for sending money in the Nordic region,” Anette Bøje, head of country for Vipps MobilePay in Denmark, said in the statement.

“The new function is good news for anyone who visits our Nordic neighbours or has family there,” she said.

MobilePay, which dominates the payment app segment in Denmark, is also available in Finland. Norwegian app payments and transfers are primarily made with Vipps, which is owned by the same company.

The new international transfer function will not be free.

A fee of 5 percent of the total transfer amount will be charged when sending money internationally. Recipients will not be charged.

The service will be extended to Sweden later in the year according to plans.

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