The EU steals your low-interest loan?
Mortgage loans have given the homeowners a very low interest rate during the financial crisis. But now it seems that one of the most important is abolished. Why is that?
One of the few positive effects of the financial crisis has been the falling interest rate on mortgage loans. The mortgage system is based on issuing bonds and selling them on the stock exchange.
It is an extremely liquid market which, even during the worst crisis (eg in October and November 2008), provides loans to the Danes. The system has proven its worth several times throughout history (since the 1790s) when the banks have not had enough money on the shelves.
The mortgage system has many advantages
From 2008 until now, the mortgage-credit market, for example, has provided Danish homeowners with loan capital at a falling interest rate, while the banks have continuously raised their interest rates and the interest margin over the same period. If Denmark had a money system similar to what is common elsewhere in the world, then Danes would have to pay more per cent more in interest on their loans.
The mortgage credit system is an important part of the housing market. It is an important prerequisite for the Danes to have many loans in their home, and at the same time it is an important part of fiscal policy in this country. By regulating the Danes’ access to loans, the Folketing can quite effectively boost the wheels or tighten up. They have done so many times over the last 50 years.
Interest rate adjustable loans under pressure
In the 90s, we received interest rate adjustable loans. A loan that challenges the Danes’ ability to understand their finances. But it also gives Danes the opportunity to always get the lowest interest rate on their loans – if they can tolerate the risk. Of course, it is the F1 loan – the one-year interest rate adjustment loan in question.
The loan that has given Danes access to the cheapest funding in Europe for 16 years is now under pressure from Europe. This is due to the fact that the other EU countries and the rest of the world do not basically understand the Danish mortgage credit system. As a result, they are too much like the banking market and the mortgage market.
The loan, which also held liquidity during the worst financial storm in 2008, is accused of not being liquid enough. The rest of the world is afraid of what happens when very large amounts of bonds are to be sold at the same time – as happens with F1 loans once a year. But that is not a problem and has not been before. Mortgage companies have, moreover, adapted the issues so that this happens many times a year today. When the interest rate adjustment loans were introduced, it only took place in December.
Special interests make it more expensive to be a Dane
If the other countries (especially England) succeed in removing the F1 loan from the shelves, it will mean that the banks will again be easier to compete with the mortgage companies. Of course, the major banking countries – including England – have a special interest in this. One can say that the banks do not mind that the Danish mortgage system is sabotaged in this way.
It is incomprehensible and completely unacceptable that other countries in this way can make it more expensive to be a Dane.
The Danish system should be the model
It is sad when considering a mediocre malfunctioning banking system in Europe and the rest of the world destroys the possibility of maintaining a good Danish mortgage credit system. It should be the other way around. The rest of the EU should see the Danish mortgage credit system as an opportunity to create a more stable financial market in Europe.