Why are fewer mortgages being approved in Denmark?

Ritzau/The Local
Ritzau/The Local - [email protected]
Why are fewer mortgages being approved in Denmark?
Demand for mortgages was low in Denmark in the first quarter of 2023. File photo: Signe Goldmann/Ritzau Scanpix

The number of new mortgages issued to home buyers in Denmark fell at the beginning of 2023 to its lowest level for four years.


The first quarter of this year saw the lowest number of mortgages approved since 2019, according to new data from Finans Danmark, the interest organisation for the banking sector.

During the first three months of 2023, a total of 15.2 billion kroner was loaned by banks for the purpose of buying homes. The total value of the loans is the lowest since 2014.

Interest rates are a key cause in the lending slow down, according to Finans Danmark’s CEO Ane Arnth Jensen.

“Increasing interest rates have made Danes more cautious about buying homes,” Jensen said in a press statement.


“That is coming to the fore in the demand for mortgages,” she said.

Last year saw a high number of homeowners take advantage of prevailing interest rates to restructure their mortgages and thereby reduce their outstanding payments. This has also seen less demand since the beginning of 2023.

READ ALSO: EXPLAINED: How to restructure and reduce your mortgage in Denmark

A total of 54.3 billion kroner was lent by banks for mortgage restructuring in the first quarter, 45 percent less than in Q1 of 2022.

Variable interest rate mortgages are meanwhile continuing to gain popularity with first time buyers, another trend related to high interest rates.

This type of mortgage now makes up 54 percent of all mortgages, compared to 52 percent in the preceding quarter.

Several factors are at play in relation to the increasing demand for variable rate loans according to Jeppe Juul Borre, senior economist with Arbejdernes Landsbank.

“Many homeowners with fixed rate mortgages have converted their loans during the last year as a result of the steeply climbing interest rates. This way they have cut a part of the outstanding debt, and many homeowners have chosen a new mortgage with variable rates for this reason,” he said.

“Interest rates on fixed rates loans are currently five percent, while the interest on variable rate loans is around three percent,” he said.

“This may also have increased the appetite for variable interest in connection with buying homes, when the financing plan is chosen,” he said.


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