Section 73 of the Basic Law, subsection 1 on the inviolability of the property is the entire collateral behind the financing of our homes and businesses.
If the politicians start to allow the regulation or disposal of assets and property without full and complete compensation, then you really put the Danish mortgage credit system at risk.
Many of the Danish mortgage bonds are bought by investors from all over the world, and the reason why we have traditionally had cheap financing for properties is exactly section 73, subsection 1.
Either the mortgage has its value, or it is bought out at full and complete market price. This provides security for those who buy the bonds.
If you imagine that agriculture has to give up a large part of the equity of 400,000 hectares, corresponding to more than 15% of the cultivated area, as well as the loss of value it entails in stables, fixtures, machines and factories, you have to think about it in a private context.
Mrs Jensen’s pension savings
Once this maneuver is accepted once, there is a precedent.
This means that investors will in future have to set aside a risk premium, which of course makes the mortgage more expensive.
This also means that the bank, from which Mrs Jensen and her family borrowed money for their house and car, must reserve 15 per cent of the loan at all times.
So they can, with a day’s notice, ask Mrs. Jensen to repay 15 percent of the loans.
If you imagine that the Jensen family has borrowed three million kroner, the family must always be able to obtain 450,000 kroner for installments, as they may risk that the mortgage may lose 15 percent of its value on the basis of a political decision.
I would like to wonder if Mrs Jensen can raise DKK 450,000 in a few days without having to pay off pension savings, sell the car or empty the children’s savings in order to live.
The politicians are therefore now sitting and deciding whether Denmark must continue to have credible principles of the rule of law in the financial world, or whether it must move towards principles they have in countries that we would not normally compare ourselves to.
2024-11-02 14:57:00
#Niels #wonders #Jensen #raise #DKK #days
**Interview on the Valuation of Danish Callable Mortgage Bonds**
**Host:** Welcome to our show! Today, we have a special guest, [Guest Name], an expert in Danish finance and real estate, to discuss the unique model of Danish callable mortgage bonds and the implications of property rights under Section 73 of the Basic Law. Thank you for joining us, [Guest Name].
**Guest:** Thank you for having me!
**Host:** Let’s dive right in. You’ve mentioned the importance of Section 73, subsection 1, regarding the inviolability of property in Denmark. Can you explain how this law underpins the Danish mortgage credit system?
**Guest:** Absolutely. Section 73, subsection 1, guarantees that property cannot be regulated or disposed of without full and complete compensation. This legal framework is crucial because it provides a strong foundation for financing homes and businesses. Investors are reassured that whether or not a mortgage retains its value, it will be bought out at the full market price, ensuring their investments are secure.
**Host:** That sounds like a significant protection for both borrowers and investors. You mentioned that the model ensures cheap financing for properties. How does this work in practice?
**Guest:** The bond system in Denmark is structured to be market-driven, which means that prices are determined transparently. Because of the securities backed by real estate under this inviolability principle, investors are more willing to buy Danish mortgage bonds. This willingness translates into lower interest rates for borrowers, making financing more accessible and affordable.
**Host:** Interesting! However, I understand there’s concern over potential regulatory changes by politicians. What impact could that have on the mortgage credit system?
**Guest:** If politicians start allowing the regulation or disposal of property assets without guaranteeing full compensation, it could severely undermine trust in the mortgage credit system. Investors might hesitate to purchase Danish mortgage bonds if they feel that their investments are at risk, which could ultimately lead to increased borrowing costs or decreased access to financing for individuals and businesses.
**Host:** It seems vital to maintain the current safeguards. What do you think needs to happen to protect this system going forward?
**Guest:** It’s essential for lawmakers to recognize the importance of Section 73 and the role it plays in maintaining both investor confidence and low borrowing costs for citizens. Ongoing dialogue between financial experts, lawmakers, and the public is crucial to ensure that property rights are upheld without compromising the integrity of the mortgage bond system.
**Host:** Thank you so much for your insights, [Guest Name]. It’s clear that protecting property rights is essential for the stability of the Danish mortgage credit system. We appreciate your time!
**Guest:** Thank you for having me! It was a pleasure to discuss this important topic.
