Households' Risks from a Danish
Financial Stability Perspective
Tue Mathiasen
Danmarks Nationalbank
Agenda


Aspects of the latest period of growth and
recession
Households’ debt and wealth



Households’ debt service issues



financial
non-financial
at the macro level
at the micro level
Way forward
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Growth and recession
- net borrowing / net lending
Net borrow ing / net lending
(Pct . of GDP - 4 qrt . avg.)
Pct .
10
8
6
4
2
0
-2
-4
-6
-8
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2000
2001
2002
2003
2004
2005
2006
Non-financial corporations
Financial corporations
Households and NPISH
Rest of the w orld
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2007
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2008
2009
2010
2011
General government
3
Growth and recession
- Changes in household balances
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4
Households’ debt and wealth
- Real economy spill-over
Pct .
300
Index
15
250
10
200
5
150
0
100
-5
50
-10
0
-15
123412341234123412341234123412341234123412
2001
2002
2003
2004
2005
2006
2007
Net f inancial wealt h (pct . of disp. income)
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2008
2009
2010 2011
Consumer conf idence (right )
5
Households’ debt and wealth
- Real economy spill-over
Households' net borrow ing / net lending, real invest m ent s and savings
(Pct . of disp. incom e - 4 qrt . avg.)
Pct .
15
10
5
0
-5
-10
-15
4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
2004
2005
2006
Net borrow ing / net lending
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2007
2008
Real investments
DANMARKS NATIONALBANK
2009
2010
2011
Savings
6
Households’ debt and wealth
- Financial wealth
Pct .
Households' f inancial net w ealt h
(Pct . of disp. incom e - 4 qrt . avg.)
1000
800
600
400
200
0
-200
-400
1234123412341234123412341234123412341234123412
2000
2001
2002
2003
Financial net w ealth
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2004
2005
2006
2007
Financial assets
DANMARKS NATIONALBANK
2008
2009
2010 2011
Liabilities
7
Households’ debt and wealth
- Total wealth
Pct .
Households' f inancial and t ot al net w ealt h
(Pct . of disp. incom e - 4 qrt . avg.)
1000
800
600
400
200
0
-200
-400
1234123412341234123412341234123412341234123412
2000
2001
2002
Financial net w ealth
Liabilities
Financial assets
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2003
2004
2005
2006
2007
2008
2009
2010 2011
Residential property, gross value
Total assets
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Households’ debt and wealth
- Property estimations


Lack of official statistics
High quality data sources


Register of all Danish property (buildings and
land)
Continuous valuation of all Danish property


for tax purposes
Property price statistics

By Statistics Denmark


By Association of Danish Mortgage Banks

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Property price index
Quarterly data on average square metre prices from open
market transactions
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Households’ debt and wealth
- Property estimations (cont.)

Estimations within Danish NCB

Method




Combination of stock (register data) by owner
sector and transaction prices (mortgage bank info.)
Stratification by groups of municipalities with similar
degrees of urbanisation
Possibility of selection bias (actual traded
property)
Not a full usage of all available high quality
data sources
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Households’ debt and wealth
- Across Nordic countries
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Households’ debt and wealth
- Gross debt
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Households’ debt service issues
- macro level
Debt service, housing loans
Kr. billion
Kr. billion
1.800
30
1.500
25
1.200
20
900
15
600
10
300
5
0
0
4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
1998 1999
2000
2001
2002
2003
Housing loans, balance
Repayments (right)
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2004
2005
2006
2007
2008
2009
2010
2011
Interest payments (right)
Debt service, housing loans (right)
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Households’ debt service issues
- composition of mortgage-credit
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Households’ debt service issues
- composition by mortgaging ratio
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Households’ debt service issues
- composition by income
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Households’ debt service issues
-exposure to interest rate changes
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Way forward


In general, a growing demand for official
statistics supporting financial stability
analysis
Examples of specific issues


Real property
Micro-macro link
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