Audio By Carbonatix
Investors in Denmark’s covered-bond market, the world’s biggest, will have to settle for lower coupons or find a new place to put their money as record-low interest rates trigger the largest remortgaging wave in well over a decade.
Property owners with around 110 billion kroner ($16.5 billion) in loans (the figure includes public-housing debt) told their banks by last week’s quarterly deadline that they will redeem the fixed-rate, long-term bonds backing their home loans, according to calculations by Realkredit Danmark, the mortgage unit Danske Bank A/S.
That’s the biggest wave of prepayments since 2005, Realkredit Danmark estimates, and it’s also multiples of the amount that generally gets refinanced in such auctions. Jeppe Borre, chief analyst at Totalkredit, estimates that borrowers usually prepay 20-40 billion kroner each quarter.
Homeowners are replacing bonds with coupons of 2 percent and above for securities with a coupon of 1.5 percent. That’s half the rate on 30-year U.S. government debt.
The development comes as central banks across the globe extend their policies of extreme monetary stimulus.
In Denmark, which uses interest rates to defend the krone’s peg to the euro, rates have been below zero for roughly seven years, which is longer than in any other country.
Latest Stories
-
Gender Ministry supports Harriet Amuzu in ongoing abuse case
9 minutes -
AG joins plaintiff to scrap OSP ?: We should be mindful of the mischief in this – Bobby Banson
15 minutes -
Samson Lardy Anyenini questions willingness of Attorneys-General to prosecute political colleagues
18 minutes -
It is only fair the OSP is heard in Supreme Court case – Bobby Banson
24 minutes -
Asiedu Nketia resumes Ashanti tour, second leg kicks off on Sunday
32 minutes -
NLA denies salary cut claims, threatens legal action over reports
36 minutes -
BoG Governor honoured for stabilising cedi, improve inflation
39 minutes -
Kyebi Easter Homecoming 2026: A resounding success!
1 hour -
Trade Minister applauds GUTA as a pillar of economic growth; Prez Mahama honoured
2 hours -
President’s brother’s takeover of Damang Mines is ‘untidy’ – Alhassan Tampuli
2 hours -
It’s not true that gov’t decided not to renew the lease for Gold Fields – Bobby Banson
2 hours -
Ghana to boost tomato production with 60-hectare irrigated farms and processing initiatives
2 hours -
E&P’s takeover process of Damang Mines was very clean – Inusah Fuseini
2 hours -
Damang takeover: There is not going to be any job loss; it is a lease change – Bobby Banson
3 hours -
Gold Fields didn’t stop mining at Damang mines; such claims are untrue – Bobby Banson
3 hours