Economists say a proposed cap on Denmark’s mortgage interest deduction, part of the government’s coming finance bill, could make it harder for first-time buyers in the Copenhagen area to get into the housing market.
The proposal would limit how much interest homeowners can deduct from their taxable income each year. DR reported on October 1, 2026 that the cap is among the measures the government may use to finance its upcoming finance bill. It would need a majority in the Folketing to take effect.
The ceiling would be set at 150,000 kroner for single people and 300,000 kroner for married couples, according to DR. The figure already appeared in the government’s coalition programme. Parts of the finance bill proposal have been presented in Berlingske, as noted in DR’s reporting.
Who the Finance Ministry expects to be affected
According to Finansministeriet, the Finance Ministry, the cap would affect around 60,000 Danes. Lise Nytoft Bergmann, housing economist at Nordea, told DR that young buyers in the capital would be the most exposed group. Prices there are high enough that buyers taking 95 percent financing would run into the ceiling.
Jeanette Kølbek, personal finance economist at Nykredit and Spar Nord, said buyers who arrive with two salaries and no family money already find it expensive to enter the market. A cap on the deduction would leave those households with less money each month, per her comments to DR. Interest rates have also risen since the summer of 2026.
Calculations from Nykredit and Spar Nord cited by DR assume a year-round home bought with 95 percent financing. That means a 30-year fixed-rate mortgage covering 80 percent, plus a bank loan equal to 15 percent of the purchase price. The calculations use a fixed rate of 5 percent, a contribution rate of 0.50 percent, a bank loan rate of 3.75 percent and a deduction value of 25.70 percent.
Prices in the Capital Region have climbed sharply. Owner-occupied flats are 18.7 percent higher than a year earlier, and villas and terraced houses are up 12.5 percent on average, according to the figures DR cites.
Economists split on the effect on prices
Curt Liliegreen, director of the Economic Knowledge Centre, told DR there is no historical evidence that a cap on the interest deduction harms the capital’s housing market. He pointed to 40 years of steep price growth for Copenhagen flats, even as the value of the deduction was eroded. He expects the market impact to be limited.
Bergmann stressed that the cap must be seen alongside the rest of the finance bill proposal. If it helps fund the abolition of the mellemskat, the middle tax bracket, the overall package could be positive for young buyers. Finance Minister Peter Hummelgaard of the Social Democrats had not commented on the cap, but said earlier in the week that the finance bill must add up and that defense spending will be prioritized.
What a cap on rentefradrag would mean for internationals buying in Copenhagen
The rentefradrag is a Danish tax deduction for interest paid on mortgages and other loans. It is claimed through SKAT and reduces taxable income, which is why its value is expressed as a percentage, here 25.70 percent. Anyone buying a home in Denmark normally combines a realkreditlån from a mortgage bank with a smaller bank loan, the structure used in the Nykredit and Spar Nord calculations.
For foreign residents buying property in Denmark without family capital, the relevant point from DR’s reporting is monthly cash flow. Buyers who need 95 percent financing in the Capital Region are the group Bergmann identifies as most exposed to the ceiling. The proposal is not law, the Finance Ministry’s estimate covers about 60,000 people, and the effect on prices is described as uncertain by Liliegreen.
