"The Traditional Danish Mortgage Model"

"Denmark has the best mortgage system in the world.  It is transparent and inexpensive.  The interest rate of a mortgage loan and the prepayment price are directly reflected in the price of the mortgage bonds funding the loan.  And everybody can monitor bond prices daily — for instance in newspaper price lists."

Nothing ambivalent about that statement!

The quotation above is from Ane Arnth Jensen, Director General of the Association of Danish Mortgage Banks.  Some might mistake her words for mere national pride if not for the fact that famed financier George Soros agrees mightily and is a major proponent of the system.

In fact, a mortgage industry expert affiliated with Soros extolled the virtues of the Danish model at the landmark hearing on covered bonds held by the U.S. House of Representatives' Committee on Financial Services (Dec. 15, 2009).

Also, implementation of Danish-style mortgage bonds is already underway in Mexico.

This very readable 30-page booklet describes how the Danes' distinctive system — which includes two types of covered bonds — functions.   It helps make clear exactly why "[t]he Danish mortgage system has survived all economic downturns thanks to a strong foundation."

To download a PDF of this booklet, click on "Danish Mortgage Model" under "Attachment," below.