For many years, the F1 loan, which is a flexible loan with variable interest rates, has been hugely popular with Danish borrowers. Among other things, during the financial crisis, when interest rates were generally low, but also because the loans are cheaper than the fixed-rate loans (compare quick loans) the first year of the loan’s maturity.
But now it seems that the F1 loan belongs to the past. Already in the spring, two of the country’s mortgage banks, NiceOne Credit / Totalcare Credit and Nordea Kredit, decided to remove the loan completely from the market because interest rates fell to negative values.
The institutes have a hard time imagining the F1 loan ever becoming attractive again.
All signs point away from the F1 loans when both the Danish Financial Supervisory Authority with the supervisory diamond (capital requirements for the different loan types, ed. ) And the different rating agencies think the loan type is undesirable. Both we and the others are in the process of explaining to customers that this is not the right loan, says Jane Lone, who is the department director at NiceOne Credit / Totalcare Credit.
Director: We do not fear the negative interest rate
Demand for the one-year F1 loan is relatively low, which is because the banks have more costs associated with F1 loans because they have to be refinanced more often compared to fixed-rate loans. Therefore, the cost to borrowers has also risen.
However, there is a difference in how the institutions perceive the negative interest rate on the F1 loan. Realkredit Danmark, which in its time introduced the loan type, is not in a hurry to dispose of the loan.
We can handle negative interest rates well
And more than 700 customers can enjoy having loans with negative interest rates. But the demand for F1 loans is very low. Flex cards have become the preferred loan for those who want short interest. We have not discussed whether we will completely close the issue of F1 loans. So we have no current plans for that, but I also won’t deny that it can happen, explains CEO Coby Hansen.
Although the F5 loan was relatively attractive at the previous auction, it will be interesting to see if the Danes continue to demand this type of loan or if at some point they also feel that there is too high a risk associated with the loan.