Danes Getting Richer Than Ever

After almost five years of negative interest rates, Danish households are richer than ever. With more cash than they know what to do with, households are stuffing their banks full of deposits. The upshot is that the country with the world record in negative rates now also boasts a record in bank savings.

Central bank data shows bank deposits in Denmark rose to 812.3 billion kroner ($117.1 billion) in December, which Nykredit estimates is the highest level since such a statistic was first compiled 16 years ago. It’s also a record when the numbers are adjusted for inflation and seasonal variations, Bloomberg reported.

Danes have enjoyed an “impressive increase in real wages,” Tore Stramer, chief economist at Nykredit, said by phone. Negative rates—the benchmark deposit rate is minus 0.65%—have also coincided with a sustained rise in employment and, crucially, a thriving housing market, he said. What’s more, banks have refrained from passing negative rates on to retail clients.

Stramer estimates that every man, woman, child and baby has the equivalent of $21,000 in a deposit account, if the aggregate figure is averaged out.

 “We are seeing such tailwinds to the household sector that Danes can both increase consumption, bring down debt and increase their wealth,” he said.

There are even signs that the record wealth levels are encouraging Danes to start paying down the rich world’s biggest gross debt burden relative to disposable incomes. For the first time since 2009, the share of home owners paying down principal on their mortgages now exceeds the share of those with interest-only loans.

Meanwhile, Danish mortgage banks will have a harder time pushing up fees after lawmakers agreed on Thursday new rules that make it cheaper for homeowners to switch to another bank when the fees go up, Reuters reported.

The sector, which includes units of Danske Bank, Nordea, Nykredit and Jyske Bank, has been criticized for recent hikes in fees, leaving homeowners with no other choice than to accept the increase or choose the costly option of switching to another mortgage bank.

Banks’ income from fees on mortgage loans totaled 10.4 billion Danish crowns ($1.5 billion) in the first six months of 2016, according to the country’s FSA financial regulator.

But new rules agreed by a broad range of parties in the Danish Parliament on Thursday order mortgage banks to notify and explain price increases six months in advance and let homeowners switch to another mortgage bank at half the normal price.