Danish Central Bank lowers interest rates

The National Bank of Denmark announced a 0.25 percentage point cut in its interest rate, now at 3.5%, effective from Friday. This move follows the European Central Bank’s (ECB) decision to similarly cut rates to 3.75%, marking the first ECB rate cut since 2019. While Denmark does not use the euro, decisions made by the ECB affect Danes due to the country’s fixed exchange rate policy that aims to maintain a stable rate between the Danish krone and the euro. The rate reduction is expected to have a limited impact on monthly mortgage expenses, with savings estimated around 140 kroner per month after taxes on a million-kroner interest-only loan, as per Christian Hillingsøe Heinig, chief economist at Realkredit Danmark. He also assesses that the housing market will unlikely see significant price effects from the minor rate adjustments, yet the reduced rate is seen as ‘moderately positive news’ for the housing market.