The Danish mortgage-credit system

The mortgage-credit institutions in Denmark have gained a central position in the Danish economy thanks to their long-standing activity as financial enterprises specialising in granting loans against mortgages on real property, and the Danish system is considered very safe when it comes to the ability to meet obligations towards bondholders.

Pass-through system where bonds and loans have to balance

Two main principles are characteristic of the Danish mortgage-credit system:

  • All lending is secured on real property and financed through the issuing of bonds.
  • The mortgage-credit institutions have no influence on the yield on the loans granted, which is entirely determined by the market.