Categorized | International

Denmark Takes Action to Avoid Another Housing Bubble

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The biggest names in the mortgage-loan industry in Denmark are calling for all lenders to take action in order to avoid the formation and bursting of another housing bubble in the Scandinavian nation. The previous housing bubble caused the last recession in Denmark, and if another housing bubble were to form, the same result would likely occur.

With that said, the nation’s major bank is asking that all lenders assign a mortgage lending value to each home on the market. According to the suggested plan, any mortgage loan application asking for more than the assigned lending value would be flat out rejected.

Major lenders in Denmark believe that such a plan is necessary, as the country is already at a high risk of falling into another recession. In fact, Denmark is the only Scandinavian nation that is showing any legitimate signs of financial difficulty.

While major lenders are making a big push for the new plan, the industry as a whole remains divided as to whether or not such a plan is desired, and whether or not it will be effective. Some believe that the suggested policy would limit home ownership to the older and wealthier population. Others believe that the country has no choice but to adapt the plan, as the economy continues to grow weaker.

At least sixty-four percent of households in Denmark own a home. That number is far greater than other European nations. For example, only forty-three percent of German households own a home. With that said, it another housing bubble were to hit the Denmark real estate market, it could potentially wreak havoc on the nation.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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