Danish Mortgage Regulations - Structure, Evolution, And Crisis Management

I. INTRODUCTION The Danish mortgage system was hailed by the International Monetary Fund in late 2006 as "highly rated" and one of the "most sophisticated" mortgage systems in the world. (1) All mortgages granted by credit institutions to property purchasers ("Homebuyers") in Denmark must be supported by an "equivalent bond with a maturity and cashflow that matches those of the underlying loan almost perfectly." (2) This foundational principle, known as the "balance principle," balanceprincippet, is codified in Danish law (3) and has been the basis and hallmark of Denmark's mortgage market model since the market's inception in 1797. (4)