The mortgage industry of Denmark has proved very effective in providing borrowers with flexible and transparent loans on conditions close to the funding conditions of capital market players. Simultaneously, the covered mortgage bonds transfer market risk from the issuing mortgage bank to bond investors. Lastly, strict property appraisal rules, credit risk management by the mortgage banks, and tight regulations including the so-called 'balance principle', have also historically shielded mortgage bonds from default risk. High industry concentration and automatic stabilizers also play a role in maintaining stability.
In Denmark, the mortgage banks are the only financial institutions allowed to grant loans against mortgage on real property by issuing covered mortgage bonds (Realkreditobligationer). The scope of activities allowed to mortgage banks is limited to the origination and servicing of mortgage loans, their funding, exclusively through the issuance of mortgage bonds, and activities deemed accessory. As of 2007, there are eight mortgage banks active in the Danish mortgage market, some affiliated with commercial banks.
Other articles related to "mortgage industry of denmark, mortgage, mortgages, denmark":
... A study issued by the UN Economic Commission for Europe compared German, US, and Danish mortgage systems ... the average interest rates for fixed-rate mortgages in the housing market started in high double figures in the 1980s and have (as of 2004) reached about 6 per cent per annum ... In Denmark, similar to the United States capital market, interest rates have fallen to 6 per cent per annum ...
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