Frontpage News 2016 Goodbye to ‘the 6 ...

Goodbye to ‘the 6 month rule’ means goodbye to mis-understandings

2 May 2016

When the Danish FSA (the Danish Financial Supervisory Board) abolishes the so-called ‘6 month rule’, presumably on 1 July, the risk of numerous misunderstandings in connection with granting credit for buying housing will disappear alongside it. This is the assessment of the Danish Bankers Association and the Danish Mortgage Banks' Federation, who welcome this development in a joint consultation response to the Danish FSA.


“Nothing can be gained from misunderstandings in an area as important as property valuation. Therefore, we welcome the removal of the ‘6 month rule’,” says the CEO of the Danish Mortgage Banks' Federation, Karsten Beltoft. 
The CEO of the Danish Bankers Association, Ulrik Nødgaard, also supports this development, but additionally emphasises that removing the rule does not change the fundamental and crucial principal that property still needs to be valued and mortgaged on the basis of the market value.
“Investors – and society in general – can continue to trust the valuation of bricks and mortar, which act as a security for lending. It is vital that the reliability surrounding valuation is not affected and that it naturally continues based on the market value,” Ulrik Nødgaard says.
If this is called into question, it can have an impact on the price of loans secured on real estate. This is an area, where Danes benefit from some of the most advantageous prices in Europe.
The background for the change is the fact that the so-called ‘6 month rule’ has been cause for debate and misunderstandings over a number of years. This is, amongst other reasons, because ‘the 6 month rule’ has been mistakenly interpreted to mean that in areas, where the average waiting time has been over 6 months, the property has been valued lower than the market value.
In light of these facts, in autumn 2015 a committee under the Ministry of Business and Growth, headed by Professor Michael Møller recommended that the regulation concerning valuation be adjusted. The Danish FSA has now sent a proposal on changing the valuation for consultation and the three financial organisations – the Danish Bankers Association, the Danish Mortgage Banks' Federation and the Association of Danish Mortgage Banks have sent a joint consultation response today.
Read the consultation response (available in Danish).
Further information:

Stine Luise Hansen, Head of Media Relations at the Danish Bankers Association
Tel.: +45 3016 1009
E-mail: [email protected]



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