The National Bank of Denmark published an analysis showing Danish homeowners’ ordinary mortgage instalments per DKK 1 million of mortgage debt fell in 2024, even though homeowners have increased the amount and share of mortgage debt with instalments since autumn 2023. The Bank links the decline mainly to higher interest rates, which raise the interest share of loan servicing and typically make amortisation profiles steeper, reducing instalments earlier in the loan term. In 2024, homeowners paid an average of DKK 18,750 in ordinary instalments per DKK 1 million in mortgage debt, down DKK 950 (4.8%) from 2023 and DKK 5,700 (23.2%) from the 2020 peak. The share of total mortgage debt with instalments was 52.6% at end-2024, below around 55% in 2020. Since the acceleration of rate increases in 2022, the average interest rate on instalment-bearing mortgage debt has tripled, rising by 1.8 percentage points, which in isolation reduced ordinary instalments by 20%. Average remaining maturity was 23 years and 10 months at end-2024 and has been broadly stable over five years; variable-rate borrowers whose rates have reset since 2022 have typically seen higher interest payments and, for many, lower instalments, while fixed-rate borrowers who maintained their loans have not seen instalment changes from rising rates. The Bank also reports higher use of extraordinary debt reduction: average extraordinary instalments were DKK 1,850 per DKK 1 million borrowed in 2024 (DKK 800 in 2020). Reductions in outstanding debt via restructuring of fixed-rate loans amounted to DKK 12,400 per DKK 1 million in 2022 and almost DKK 8,000 in 2023, reflecting early repayment below par and refinancing into a new loan with lower outstanding debt.

Original source View in tracker