Copenhagen Stock Exchange: Focus: RenteMax – New Mortgage Loan With Interest Rate Cap

In Focus no. 96, Thomas Kyhl, Chief Analyst, and Steen Hauskou Bertelsen, Economist, Nykredit, describe Nykredit's new mortgage loan type (RenteMax) – a product that combines a floating-rate loan with an embedded interest rate cap.

The interest rate cap means that the loan rate will never exceed a pre-fixed level – typically 6%. Borrowers pay a spread for the interest rate cap but are in turn protected against sharply rising interest rates.

The article focuses on Nykredit's new mortgage loan, comparing this to other types of floating-rate loans in Denmark. The article includes a comparison of the costs of different loan types subject to a hypothetical interest rate scenario.

Read more about floating-rate loans and Nykredit’s RenteMax in Focus no. 96 at www.cse.dk. Questions to the authors may be sent to the e-mail address info@cse.dk until 10 January 2005.