Danish Financial Supervisory Authority publishes review and seven focus points for banks’ advice on mortgage loan conversions

The Danish Financial Supervisory Authority has reviewed how selected banks inform and guide customers who are considering converting their mortgage loans, and has set out seven focus points that banks should follow to ensure homeowners understand the risks before making a decision. The review highlights that mortgage costs are a major part of most households’ finances and that customers may consider conversion when interest rates change. While an up-conversion can produce a gain, the Authority stresses that customers also face risk if interest rates do not move as expected, and that banks’ advice should clearly explain the uncertainty and the concrete financial impact if rates rise rather than fall. The banks included in the review submitted the customer- and adviser-facing materials they use and answered supervisory questions, forming the basis for the Authority’s observations and the seven focus points intended for all banks.