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In spite of rising bank interest rates, increased mortgage administration rates, higher property taxes and lower interest deduction in Denmark during the past year, it was nearly 19% cheaper to finance and pay property tax on a recently purchased home. The reason is that both housing prices and interest rates on mortgage bonds have fallen significantly, says the Danish Real Estate Association.

Many homeowners will see their property tax increase by 4.3% this year. Also increasing is the amount paid to the mortgager to administer the loan (contribution rate). Rates have risen in recent months and further increases have been announced. Adjustable-rate mortgages and interest-only loans have seen the largest increases; the contribution rate on interest-only, fixed-rate loan increased by 0.1% over the past year. Finally, Danes will pay more interest on bank loans. Bank interest rates on new lending for housing have risen by 1.4%. 

Despite all these rate increases in the past year, it is actually becoming cheaper to finance a house purchase. The yield on the bonds underlying the mortgages that can finance up to 80% of a house value has fallen considerably over the past year. A 30-year fixed mortgage rate has fallen from more than 5% a year ago to less than 4% today. 

And while mortgage rates have fallen, house prices also declined. According to a leading Danish residential property listing site, housing prices dropped 9.4% nationwide during the last few years, thereby reducing the cost to finance a home. Considered all together, the total cost of financing and property tax has been 18.9% cheaper over the past year.