This sounds good, but I don’t fully grasp the covered loan aspect. So the bank is required to sell a matching bond on the open market. What’s the difference between the rate on mortgage and the rate on the on bond? Is it also matched or just the principal? Does that make the interest a wash for the bank, so that their primary motivator is fee collection?
This sounds good, but I don’t fully grasp the covered loan aspect. So the bank is required to sell a matching bond on the open market. What’s the difference between the rate on mortgage and the rate on the on bond? Is it also matched or just the principal? Does that make the interest a wash for the bank, so that their primary motivator is fee collection?
Here’s an in-depth comparison between the US and Danish mortgage models. It’s a PDF from the NY Fed:
https://www.newyorkfed.org/medialibrary/media/research/epr/2018/epr_2018_us-danish-mortgage-finance_berg.pdf