Fixed-rate loans (fastforrentede lån in Danish), the most common for homeowners, currently have interest rates of three percent.

That represents a doubling of the interest rate on this type of loan in the last three months, and a six-fold increase compared to a year ago.

Such a hike in the rate will impact both homeowners and people looking to get on the housing ladder, senior economist and analyst Jeppe Juul Borre of Arbejdernes Landsbank told news wire Ritzau.

“The interest rate increase mean that certain types of people who want to buy homes can find themselves in a situation where they have to realign their dream homes when looking for a place to buy,” Borre said.

“Financing will simply take up a larger part of the budget and that can have the consequence that some people may have to find a cheaper home,” he said.

“That could be done by changing demands on size, condition or location,” he said.

Interest rates on mortgages have been relatively low in recent years, primarily due to favourable monetary policy at central banks.

Several central banks have signalled an upcoming change in monetary policy that will bring higher interest rates. The United States central banking system, the Federal Reserve, has already increased interest, news wire Ritzau writes.

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