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Les Calvert

Les Calvert is the owner and CEO of many internet property and travel related websites including this overseaspropertymall.comand he regularly writes news and articles for his websites, trade magazines and newspapers.

Buying property abroad

International real estate agents are struggling to give the impression that holiday hotspots like Spain, Portugal and Greece have seen resurgent property markets in the last year, and that buyers who get in quick will get a bargain before prices reflate. However, figures from Eurostat, the EU’s data agency, show much of this optimism to be ill-founded. Across 2013, much of Europe actually saw prices fall, especially in the continent’s holiday areas, while there are many developments in Spain that may never be sold at any price, and many more properties are in the hands of ‘bad’ banks designed to isolate toxic assets.

What does that mean for British property buyers?

Let’s use Spain as a case study.

In Spain, Britain supplies by far the majority of overseas buyers, and most British people are to be found in coastal areas – the traditional holiday hotspots hardest hit by the crash. In many of those areas, there are substantial developments built for a market that no longer exists and which are expected never to find buyers at any price. Unfinished, often sub-standard, the argument over these monuments to hubris centres on whose responsibility the expense is of knocking them down.

And after years of plummeting house prices in Spain, it’s understandable that British buyers would want to tread carefully, but while the picture is mixed there is some good news.

Well into 2014 the Spanish market was providing plenty of grounds for scepticism, but experts now predict price rises in 2015 and prices have actually begun to increase this year.

Professor Gonzalo Bernados, an expert in the property field at the University of Barcelona, believes that house prices in the best districts of Spain’s major cities – Madrid, Barcelonia and Valencia – will rise by as much as 10% in 2015.

Professor Bernados observes that the Spanish economy is showing signs of recovery and that when this is combined with low interest rates, it is more advantageous for many people to buy a home than to rent one.

In a note of warning to those considering buy-to-let, Professor Bernados foresees a decline in the rental market as Spain loses population and the economic pressure in favour of buying. This year has seen the highest number of home sales in Spain since 2011 and both sales and prices are forecast to rise next year.

There are positive signs even in Greece: foreign buyers doubled their investment in Greek property in the first half of 2014 compared to the same period the previous year, and  Greek tourism is recovering faster than the rest of the country’s economy, meaning that now might be a good time to buy a property in Greece.

In Portugal, meanwhile, the news is also, finally, positive. RICS/Ci reports that market confidence is returning, with new buyer enquiries and transactions increasing. ‘PHMS results show sales activity continues to pick up,’ RICS stated in a report, ‘while prices appear to be a step closer to stabilisation.’

Europe’s real estate agents have been talking up the continent’s resurgent market for two years now. Last year, they had little enough evidence on their side: this year, their optimism is looking more realistic. If you’re in the market for a European home, now might be a good time to start looking!

Las Vegas

New data from the Greater Las Vegas Association of Realtors (GLVAR) indicates that the median house price in Southern Nevada increased only slightly last month as fewer homes were sold.

GLVAR reported that the median price of single-family homes sold in September this year was $202,500, up 1.3% from $200,000 in July and August, and up 12.5% from a year ago. Meanwhile, the median price of condominiums and towhouses in September went down slightly, by 0.7% from $105,000 in August to $104,250 in September. While month-on-month rises may have slowed, though, prices are still 9.7% up from a year ago.

The president of GLVAR, Heidi Kasama, said, ‘Our housing prices went up slightly last month, but they haven’t really changed much these past few months.’ Our market is entering a more stable time, with inventory levels increasing slightly and price increases moderating. Overall, I still think this is a great time for buyers to enter the market.’

Ms. Kasama also pointed out that GLVAR’s median local house price remains well below the peak for Southern Nevada property prices, in June 2006, when the median price was $315,000 – yet prices are also significantly above the rock-bottom $118,000 median of January 2012 too, meaning a more stable market. It’s also a good market for investors – median house prices rose by 24% year-on-year in 2012 and 2013.

However, stock is running down. GLVAR said the total number of existing homes, condominiums and townhouses sold in September was 2,982, down from 3,120 in August and from 3,259 in September of 2013. Kasama said local home sales are running about 12% behind last year’s figures. In fact stock is running so low that it may be destabilizing the market: there’s about enough housing stock in Southern Nevada to support current sales for four months. REALTORS® considers that a six-month supply is a sign of a balanced market.

Distressed sales have been falling for the last two years, according to GVLAR. That trend has continued in September when GLVAR reported that 10.4% of all sales were ‘short sales’ – where a lender allows the sale of a distressed property for less than is owed on the mortgage. That’s down from 11.5% in August, and straight bank-owned sales were also down, to 8.8% from August’s 8.9%.

Part of the decline in sales in Southern Nevada is a result of uncertainty in the market as to whether Congress will vote to extend the Mortgage Forgiveness Debt Relief Act of 2007, which expired on December 31, 2013. If Congress doesn’t reenact the law and make it retroactive to January 1 2014, there will be an unexpected and significant tax hit for anyone who completed a short sale in 2014, a consideration which is understandably subduing the market in that area.

Another consideration is that the real estate market in Southern Nevada appears to be shifting bases. In September, the monthly total value of real estate transactions was down 11.3% for homes – but it rose 16.8% from August on condominiums and townhouses.


The narrative we’re used to hearing is pretty simple. Whether the fault lies with an economy that doesn’t provide young people with opportunities or with a lazy, entitled generation that doesn’t know how to save and can’t live without superfast wi-fi, takeout coffee with cinnamon in it and pop tarts for breakfast is a matter of personal opinion, but the facts are very clear. Generation Y – the generation that’s now between 18 and 33 – aren’t moving out of their parents’ houses to form households of their own.

That’s a problem for them – at 18, the basement room looks pretty sweet, but by 30 you’re not so impressive or impressed – and a problem for parents who were looking forward to an empty nest and find themselves sharing staid family homes with their adult children. But it’s a massive problem for the property market in America and in Britain, too, where the same trend is present. Simply put, your country needs YOU – to buy a house, and millennials aren’t cooperating.

Jonathan Smoke, chief economist at Realtor.com, sums up: ‘the story line has been that millennials are not forming households, they’re living with mom and dad.’ But Mr. Smoke points out that that isn’t where they want to stay, if the numbers are anything to go by. In July this year, more than a third of people between 25 and 34 used a mobile device to look at real estate data. That leads him to the opinion that millennials are planning their next move – even if it’s their first – and reaching for the natural tool of their generation, mobile internet, to research the market and learn their options.

That impression is backed up by data from elsewhere. Millennials might be staying with their parents for now, but it’s not the plan – according to a recent Redfin survey, 92% of 25-34-year-olds who don’t currently have a home want to buy one in the future. And they have pretty clear ideas about what they want, according to Nela Richardson, Redfin’s chief economist.

That’s important because we can expect millennials to one day comprise the majority of the housing market, as their parents stop buying and younger people with less income and different interests can’t buy as much market share. The wants and needs of the ‘baby boom’ generation shaped the American housing market for decades, and millennials, says Ms. Richardson, will do the same. Mr. Smoke agrees, and points out that there are 87 million millennials in the USA – compared with 75 million boomers.

Amenity-rich urban environments are currently the big draws for millennial renters, the segment of the population that has a say about where it lives. All the clichés are in place, like coffee shops and bars, but so are some eminently practical, down-to-earth considerations like walking to work and proximity to transportation. Ms. Richardson thinks that when millennials come to buy homes, they’ll transfer this amenity-rich lifestyle right along, and she foresees a suburbia transfigured by millennial preferences. But there’s another alternative. What if millennials are the generation that repopulates American cities – and what if the same happens in the UK and Europe?


Fears about a recurrence of a new property bubble dog the Scandinavian housing markets – with some reason. In Denmark, the price of an apartment in the port city of Copenhagen has risen twice as fast as house prices in the same area, according to Denmark’s statistics agency.

It means apartment prices in Copenhagen now are higher, relative to income, than they’ve ever been in Denmark – and there’s never been a bigger mismatch between house and apartment prices either, says Danske Bank A/S (Danske), which is both Denmark’s largest bank and the parent company of the country’s second largest mortgage lender. The sales price of an apartment rose by 6.3% year-on-year in May this year; house prices rose by 2.4% year-on-year in the same period.

Denmark isn’t the only Scandinavian economy that’s showing signs of pressure, and Sweden and Norway are both already working to cool their bubbling housing markets, especially in major cities.

Sune Mortensen, vice president at Nykredit Realkredit A/S, Europe’s biggest issuer of mortgage-backed covered bonds, weighs in. ‘You see growth again, you see rising home equity again,’ Mr. Mortensen says, adding, ‘when we saw that the last time, people lost their minds and their good sense.’

Apartments have been a better indicator than houses of the direction of the housing market, and the apartment market is speeding up at a far faster rate than the house market. An 80-square-metre apartment in Copenhagen now costs the same as a 140-square-metre house, according to Christian Heinig, chief economist for RealKredit Danmark, Danske Bank’s mortgage arm.

So what’s causing the disparity? Low interest rates, which restricted price falls after the 2008 collapse to about 20% (for comparison purposes prices fell in Spain by 46% overall and up to 70% in some areas), now risk sending prices rocketing as credit comes into the reach of more people faster.

Mr. Heinig thinks this risks causing a second bubble, especially in the Copenhagen area, and points out that low interest rates and a market led by red-hot major cities and not appreciably cooled by rural slumps is a worldwide phenomenon. The peak in prices represented by Copenhagen isn’t just tall – it’s narrow too.

In Copenhagen’s suburbs prices are almost a third lower. ‘The risk,’ he told Bloomberg, ‘will naturally rise as soon as the Danish economy moves into high gear at the same time rates stay relatively low for a long period.’

Denmark may have the same housing market problems as a lot of other countries – but it has some issues that are all its own too. Demand for Denmark’s covered bonds, which fund virtually all mortgages in Denmark, may be fuelling price increases by holding down the cost of borrowing and increasing demand. Add in the increasing safe-haven investment from Ukraine, where investors fear political unrest and see Denmark as secure, and there’s a recipe for danger. When that combines with a rising tide that makes Danish families to forget the lesson of the 2008 crash – ‘be wary of debt’ – it’s easy to see why so many people are concerned.

Australian Housing

Figures have been released showing that land prices in Australia are on the rise. The increases are largely concentrated in the country’s capital cities, and there was a sharp difference between the increases in capitals and in the country as a whole. The news comes as the property market in Australia attracts attention for price growth that some commentators say signifies a bubble.

At the same time, auction sales are also rising in Australia. According to RP Data spokesperson Robert Larocca, scheduled sales by auction rose by 12% in September 2013, with capital cities seeing most of the action.

Australian land prices have risen sharply, with an average 6% rise across capital cities to a AU$247, 000 median lot price, but in the regions the increase has been negligible, with growth of only 0.6% to a median AU$156, 000 price.

RP Data’s national research director Tim Lawless commented that price growth is being driven by factors including a lack of vacant residential land and an overall reduction in land lot size. ‘The follow-on effect for the housing market has become a key contributor to the rising cost of housing – this is particularly noticeable in capital city markets,’ Mr. lawless said.

That sharp rise focussed on capital cities has some people worried, pointing to the fact that by some measures Australia’s houses are already overpriced. Australian homes are among the world’s most expensive when measured against rents and incomes, key indicators of affordability and of the market’s link with the real economy. The Bank for International Settlements, which acts as a central bank to the central banks of the world’s nations, pointed out that the Australian housing market looked vulnerable to sharp corrections when it released its report earlier this month. For a number of countries, including Australia, the report stated, ‘current property prices are much higher than those implied by the historical relationship to rent,’ and therefore ‘there could be a reason to expect a price correction in the future.’

Across Australia, that process may have already begun. Across the country prices have been flat for the last three years, a blanket view which masks sharp increases in Melbourne and Sydney and drops in prices in the regions.

What’s even more disconcerting is that in the background, China’s economy is grinding slowly to a halt. As that happens, demand for Australia’s key industry, mining, falls too, undermining the real economy even as a wildly out-of-balance housing market struggles to stay on the tightrope. Even in Sydney, where prices have been rising, regulators like the Reserve Bank and the Australian Prudential Regulatory Authority have been letting investors know that ‘they shouldn’t expect house prices to continue to rise,’ according to financial journalist Jonathan Shapiro.

The form that the correction is likely to take is that owner-occupiers will reduce their demand, and that when that happens, investors, many of whom are already jittery, will start to sell.

Costa Del Sol

Spanish House Prices Rise – And Foreign Buyers in Spain Face Regulations That Give With One Hand, Take With the Other

House prices in Spain are rising again. In the second quarter of this year, prices in the country, one of the worst affected by the financial crash of 2008, have risen for the first time in six years, according to the Instituto Nacional de Aestidiscica (INE).

The annual variation in the property price index (IPV) increased more than two points in the second quarter of 2014, rising to 0.8%, the first positive rise since 2008. The price indicator of new houses showed an increase of 1.9%, three points higher than the first quarter of this year and the first positive increase since the last quarter of 2008.

These positive indicators have provoked analysis out of all proportion to the tiny 0.8% rise in prices, exactly because it is a rise. What it isn’t is a sustained long-term growth in a housing market powered by a real economy. In fact, Spain’s unemployment rate has actually risen slightly. Construction industry data is unpromising, and credit availability is an ongoing bone of contention in Spain.

Further price adjustment could be around the corner, and there is the danger that a modest rise in prices might trigger vendors, both institutional and private, to act to shed properties which they have been eager to offload for some time. A major obstacle to the development of fluidity in the Spanish market has been the unwillingness of vendors to drop prices any lower: the current slight rise might trigger a fresh round of sales.

As with many national statistics, the figures hid major regional variation. What’s really happening in Spain isn’t a timid recovery: in some areas it looks like full recovery, while in others the nosedive continues. In Valenciana, sales rose by 4.3%, a respectable increase. In Murcia, they fell by 11.8% year on year. The big winner is Malaga province, location of the Costa del Sol, where prices have jumped by 24% year on year – as against 10.7% nationally.

For British buyers, the ground in Spain is shifting in other ways too.

Plans to axe the tax allowance for retirees are mooted right now, meaning that British expatriates living on pensions could face a tax rate of 20% on their income, losing up to €4, 000 a year. The move would be wildly unpopular: expats, and those who would like to become expats, can look to better news from elsewhere on Spanish taxes though.

The European Union’s top court in Luxembourg recently ruled that Spain’s tax system is against EU law, and that accordingly, the Spanish government will have to alter inheritance tax laws which disproportionately privilege Spanish over non-Spanish people. Spain’s government has yet to be clear on when this will happen, but it does have to comply with the instructions from the EU.

What does this mean for British and other overseas buyers? If your income is mostly from a fixed source like a pension you probably stand to lose out financially. Others stand to gain from the changing tax rules. And the market remains uncertain: there are bargains to be had, and growth in some areas is already well underway, while others remain depressed, meaning the potential for rental is reduced. Some Spanish locations will always be popular – witness the revival of the Costa del Sol.

holiday home in provence

Selling your holiday home? Do it up first, or risk getting a far lower price. That’s the word form the iProperty Company, an online property portal. iProperty carried out a survey this year, asking 2, 000 British holiday home owners what their approach to décor and upkeep was. The results may surprise you – or perhaps not.

The survey found that 53% of British holiday home owners have an attitude to property upkeep and maintenance that’s most-politely described as ‘laid-back’ – when it comes to their holiday home. Often this attitude is at odds with the way they approach their main residence.

iProperty’s CEO, John Candia, remarked that ‘the allure of time spent away from the grind for the quarter of a million Brits who own holiday homes abroad… means the usual keeping up with the Joneses behaviour is abandoned, and household snags that would usually irritate at home, are overlooked.’

Unsurprisingly, respondents had had every intention of looking after their holiday home when they bought it – in fact, 100% of respondents said they had intended to improve the property when they bought it. But for most, that wasn’t how things really worked out, and 79% admitted that they hadn’t so much as touched a paintbrush since their first holiday stay there – even though they’d often go more than once a year, with 58% of respondents saying they visited their holiday home at least four times a year, sometimes going as often as once a month.

Despite visiting often, though, householders didn’t find the time to fix a litany of decrepitude that included broken toilets, ugly floral carpets, mismatched sofas, leaking taps, tacky avocado bathroom suites that had seen better years (the 1970s) and more. The décor faux pas included net curtains, novelty crockery and flocked wallpaper, while many of the holiday home owners surveyed admitted to having cupboards containing out-of-date tinned foods. Basic maintenance tasks like washing up, mowing the lawn and dusting were often left too late – or never done.

But the decay went further than long grass and old tins, or even avocado bathroom suites. In their holiday homes, respondents said that they often overlooked dead lightbulbs and two thirds even admitted to ‘forgetting’ missing doorknobs on doors, cupboards and drawers.

Mr. Candia pointed out that all these issues could significantly lower the sales price of otherwise highly desirable properties. ‘Obviously relaxation is important whilst on holiday,’ he observed, ‘but owners should be warned that continual neglect of their homes could seriously devalue the property when it comes to selling.’

Unfashionable décor, at one end of the scale, is likely to have a smaller effect on potential buyers than long term neglect that can lead to structural damage or degradation, though you should probably do the washing up before the viewing.

Mr. Candia also pointed to an emerging trend: while the holiday home owners surveyed owned holiday homes in the UK and abroad, the number of people who regard the UK as a desirable location for a holiday home has risen to 46% of the nation, with the most desirable areas being the South West, London and Wales.

Mr. Candia’s recommendation? If you’re selling your holiday home, look at it through the buyer’s eyes. Have it professionally cleaned if you can’t face doing a really deep clean yourself – it will pay for itself in added sales value. And face the fact that holiday homes tend to accumulate unwanted trinkets, momentoes, and unwanted household items, as well as avocado baths. Be ruthless, and you’ll be rewarded.

San Francisco

The number of US homeowners underwater on their mortgages is falling, but not as fast as prices are rising. That’s the news from real estate firm Zillow, who released data showing that around 8.7m homeowners were holding negative equity. That’s about 17% of US homeowners, but the trend is encouraging in that it’s down from 18.8% in the first quarter of 2014 and 23.8% a year ago.

The data also showed that the ‘effective negative equity rate,’ defined as the number of homeowners who have less that 20% equity in their home, fell to 34.8% in the second quarter, down from 36.9% in the first quarter of this year and 41.9% last year.

‘Effective negative equity’ is a term that covers people who technically don’t have negative equity, but who have to deal with many of its consequences, since they have so little equity they struggle to afford to move house or cover the costs of purchasing a new property.

The cycle of negative equity, failure to keep up with payments and risk of repossession brings undervalued properties onto the market, depressing prices and damaging the industry, apart from the human cost. But right now the trend seems to be in the opposite direction: prices are rising, and have risen steadily this year.

In future, the national negative equity rate is expected to fall to 14.9% by the end of the second quarter of 2015, according to Zillow’s Negative Equity Forecast.

However that’s likely to look a little different on the ground as, like prices, growth and sales, it can be expected to vary city to city.

Right now, Atlanta has 28.9% of its homeowners underwater, and Las Vegas has 27.4%. In Chicago, 27.1% of homeowners were facing negative equity at the end of the second quarter. Beating the odds at the other end of the scale, San Jose has 4.6% homeowner negative equity, 8.2% of San Francisco homeowners and 8.3% of Austin homeowners are underwater. These figures probably reflect long term trends.

There are key generational differences as well as geographical ones. Approximately 42.6% of ‘generation X’ (35-49 year-olds) homeowners are underwater; compare that with 15.3% of millennial homeowners, an age group considered to mean about 20 to 34, and 31.1% of ‘Baby Boomers’ aged 50 to 64.

Zillow’s chief economist Stan Humphries says, ‘on the surface, the housing recession did not overtly impact millenials’ housing wealth to the degree it did generation X and the Baby Boomers, as most millenials were too young to have purchased a home during the bubble years. But as this generation begins to consider buying homes, they’re entering a market still very much in recovery and far from anyone’s definition of normal.’

Traditionally, you’d expect homeowners in different age groups to be essentially on different steps of an escalator: get a little older, make a little more, move to a nicer house. But if the age group above you is mired in negative equity, they can’t afford to put their homes on the market. That means that millenials will struggle to step up until gen-X homeowners move on – and they can’t afford to. This effect partly explains the low figure for negative equity among millenials, who can’t move into the affordable starter homes that gen-Xers can’t afford to move out of.

As Mr. Humphries says, ‘Because so many homes are still in negative equity or are effectively underwater, the inventory of homes for sale is severely constrained,… and millennials don’t have the resources to compete with cash offers or engage in bidding wars.’

America’s housing market is still struggling to right itself, but while so many homeowners are underwater that return to normality is still some distance off.

Condo Apartment Building in Miami

The Miami real estate market, long one of the USA’s most robust, continued to see rising prices in the second quarter of 2014, according to the latest estate agents’ report. The data, from the Miami Association of Realtors, shows a strong demand overall, but particularly good markets for single-family homes priced between $200, 000 and $400, 000.

The median sales price for a Miami-Dade County home was $245, 000 in 2014’s second quarter, showing a jump of 8.9% compared to last year. Meanwhile, the prices of condominiums rose by 5.6% year-on-year to $190, 000.

The market has seen prices increase for ten consecutive quarters now, and performance has been strong for both single-family homes and condominiums.

What’s behind the Miami area’s booming real estate market is demand from both domestic and overseas buyers, meaning there’s always more demand.

‘While supply is growing and creating more balance between buyers and sellers, inventory in certain price points and market segments remains tight, particularly of single family homes,’ observed Liza Mendez, chairwoman of the board of MAR.

Across Florida, prices are rising and the real estate market is robust. The median sales price for a single family home across Florida rose by 5.3% year-on-year to $180, 000, while for condos it rose 10.1% to $142, 000.

In Miami-Dade county, meanwhile, the focus on Ms. Mendez’ price points is clear. While the increase in inventory sold in the second quarter of 2014 was negligible at 0.9%, that is in comparison with Q2 2013 which showed record sales activity. Zoom in, and the figures tell a slightly different story.

Sales that don’t appear to have moved much actually shifted in two opposite directions simultaneously. Sales of single family homes rose significantly – by 4.9% – while sales of condominiums decreased by 5.2%, despite rising condominium prices. That trade-off – rising prices, falling sales, or vice versa – is what you’d expect to see in a stable market. By contrast, prices and sales rising at once shows strong growth. It’s the market in single family homes that’s really booming in Miami.

‘As the Miami real estate market continues to normalize and perform in a healthy manner, there are increased opportunities for all types of buyers. While inventory is still limited depending on the area and price range, buyers generally have more to choose from and prices remain at affordable 2003 levels,’ says Francisco Angulo, residential president of MAR.

At the current pace of sales, inventory for single family homes stands at 5.5 months and that or condominiums at 7.8 months. Compared to the second quarter of 2013, inventory has risen by significant amounts – 13.5% for single family homes, 33.6% for condominiums. When inventory, sales and prices rise at the same time, that’s a sure sign of boom times; meanwhile some of the additional increase in condominium inventory may be a result of falling sales in that sector, traditionally one of Miami’s strongest.

Sales that were all cash fell slightly, indicating an increase in purchases that stretched the buyer’s finances – homes or living in, not investments. That’s another good sign for the Miami real estate market.


Denmark has finally been able to break out from the debt trap. With the improvement of amortization rates, the world’s most severely indebted households have been saved from the buildup of further debts.

According to the Danish Mortgage Bankers’ Federation, issuing of interest-only loans is now in its highest point. Echoing a similar view, Danske Bank A/S, Denmark’s largest lender, predicts the decline of non-amortizing loans. Jan Oestergaard, senior analyst at Danske from Copenhagen, said in an interview that the share of interest-only loans will most probably see a decrease, but it all depends on the interest rates in the following months.

Loans that are interest-only provide users with a grace period of up to 10 years for the returning of the borrowed sum. The mortgage market of Denmark, which is valued at almost 500 billion dollars, comprises of almost 50 to 55 percent of the interest-only loans. This has had a destabilizing effect on Denmark’s home finance market, which has also got the largest per capita income in the world. Denmark has been urged by the Organization for Economic Cooperation and Development to create a policy that will help in the reduction of the gross household debt, which has been at a record high.

As of now, the government of Denmark is struggling to come up with ways to reduce the number of interest-only loans issued by lending institutions. The new set of rules, guidelines, regulations, and limits is expected to be released and published later in the year.

Waiting for the rules

Henrik Sadd Larsen, the Business Minister of Denmark, has said that officials are trying to come up with a solution that lets the interest-only loan system stay without creating threats for the financial stability of the country.

Banks say that their efforts to push people to opt for amortizable loans have started to show positive results. Households have repaid approximately 2.5 billion kroner in the first part of the year itself. The same time last year, the net borrowing was estimated to be nearly 9 billion kroner.

The new approach

The Danish Mortgage Bankers’ federation Head Karsten Beltoft believes that the new regulations will allow the banks to decide on the limit of interest-only loans, which would be further subject to each household in question. He thinks that it would not work to have a standard limit of 60% across the industry.

FSA is most probably going to come up with guidelines for having a proportion of the total portfolio as interest-only loans. Beltoft also said that almost every second person opts for interest-only loans even today, and this way, the chances are to end up with approximately 50 percent.

The problem

The problem is that interest-only loans have become quite the norm with the Danes. With the interest rates as low as they are today, they do not see any incentive in moving to a amortized loan system. For them, it will directly translate into a major change in the monthly money they have at their disposal today.

IMAGE: “Christiansborg, Copenhagen” by Tim Bartel from Cologne, Germany – Christiansborg. Licensed under Creative Commons Attribution-Share Alike 2.0 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Christiansborg,_Copenhagen.jpg#mediaviewer/File:Christiansborg,_Copenhagen.jpg