Danish homeowners will see their interest payments rise by hundreds of kroner a month after the country’s central bank raised interest rates on Thursday for the first time in three years.
Danmarks Nationalbank said in a statement that its key interest rate – the certificate of deposit rate – would be 1.85 percent, while the lending rate will end up at 2.00 percent. The announcement marked the first increase in the interest rate since 2023, and followed a similar 0.25 percentage point raise from the European Central Bank (ECB).
According to AL Sydbank, this will have consequences for thousands of Danish homeowners with a so-called F-kort mortgage, on which the interest rates are set every six months, with a new rate set on July 1st.
“An interest rate increase of 0.25 percentage points means that the monthly payment will increase by around 150 kroner per month after tax on an interest-free loan of one million kroner,” Brian Friis Helmer, the bank’s private economist, said.
“That bill could even become larger at the turn of the year if the ECB follows up with another interest rate hike in the autumn.”
Mikkel Høegh, housing economist at Jyske Bank, said that while the period of slowly falling interest rates was over, inflationary pressure would be temporary.
“The increase means that the period of falling interest rates is over. Rising inflation is the explanation for this development. The increase in inflation is largely a consequence of the conflict in the Middle East,” he told Danish broadcaster TV2.
“We should expect that when a solution is found there, inflation will decrease again and thus over time also create room for interest rate cuts again in the future. Wars are fortunately temporary – although sometimes they drag on.”
