Moreover, the Mortgage Credit Act establishes strict lending rules which differ depending on the type of property financed.
The last major round of reform took place in 1989, among others authorizing commercial banks to own mortgage credit institutions.
[8] In the event of non-payment of its mortgage-related obligations by the mortgagor, the mortgage bank may put the property up for a forced sale.
It typically takes no more than six months from the time when the borrower defaults on the loan until a forced sale can be carried through.
The associations are subsidised by the government and municipalities in terms of reduced interest and mortgage repayments and loan guarantees.
A study issued by the UN Economic Commission for Europe compared German, US, and Danish mortgage systems.
The German Bausparkassen have reported nominal interest rates of approximately 6 per cent per annum in the last 40 years (as of 2004).
In the United States, the average interest rates for fixed-rate mortgages in the housing market started in high double figures in the 1980s and have (as of 2004) reached about 6 per cent per annum.
However, gross borrowing costs are substantially higher than the nominal interest rate and amounted for the last 30 years to 10.46 per cent.
In Denmark, similar to the United States capital market, interest rates have fallen to 6 per cent per annum.