Covered bond regulation

Covered bond legislation regulates a long list of parameters in relation to mortgage lending and and issuance of covered bonds. The Danish Financial Supervisory Authority oversees compliance with the regulation.

Mortgage lending regulated by covered bond legislation

  • Loan-To-Value limits, valuation, loan terms and repayment profiles are governed by legislation
  • The Danish FSA monitors compliance and may demand that loans originated in breach of legislation be removed from the cover pool and be funded with the bank's equity
  • Legislation limits Interest Only periods for retail mortgages with LTV >75% to 10 years
  • Loans to subsidised housing carry a public sector guarantee and are heavily regulated

Maximum legal loan terms

Property Type Legal maximum LTV Maximum loan term
Owner-occupied dwellings 80% 30 years
Agricultural properties 70% 30 years
Subsidised housing          80% 40 years
Private rental housing 80% 30 years
Office and retail 60% 30 years
Trade and industry 60% 30 years
Cultural-purpose properties 80% 30 years
Holiday dwellings 75% 30 years
Undeveloped land 40% 30 years

1 Nykredit's credit policy can be more restrictive