## Denmark: Systemic Issues in Mortgage Loans and Covered Bond Finance: Technical Note

_IMF Staff Country Reports, December 18, 2014_

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## Bibliographic details
- Published: December 18, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498327572.002

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### Summary
- This technical note analyzes systemic issues in mortgage loans and covered bond finance in Denmark.
- Mortgage lending has seen significant product innovation in recent years.
- Loans with adjustable interest rates and/or interest-only periods had grown to 75 percent and 53 percent, respectively, of total outstanding mortgage loans at the end of 2013.
- The major changes in the characteristics of the underlying mortgage loans have been reflected in an important evolution of the covered bond market.
- Traditionally, covered bonds were callable annuities with maturities closely matching those of the underlying fixed rate loans.
- Adjustable and variable interest rate loans are financed by bonds with short maturities.

### Key Findings and Statistics
- Share of total outstanding mortgage loans that were adjustable interest rate loans at the end of 2013: 75 percent
- Share of total outstanding mortgage loans that had interest-only periods at the end of 2013: 53 percent
- Length of the technical note: 27 pages
- Volume: 2014
- Issue: 349
- Series: Country Report No. 2014/349
- DOI: https://doi.org/10.5089/9781498327572.002
- Stock No: 1DNKEA2014007
- ISBN: 9781498327572
- ISSN: 1934-7685

### Evolution of the Covered Bond Market
- Traditional structure:
  - Covered bonds were callable annuities.
  - Maturities closely matched those of the underlying fixed rate loans.
- Recent evolution:
  - The shift toward adjustable and variable interest rate mortgage products has led to financing via bonds with short maturities.

*International Monetary Fund. Monetary and Capital Markets Department "Denmark: Systemic Issues in Mortgage Loans and Covered Bond Finance: Technical Note", IMF Staff Country Reports 2014, 349 (2014).*

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/denmark-systemic-issues-in-mortgage-loans-and-covered-bond-finance-technical-note-42537_