IDEAS home Printed from
   My bibliography  Save this paper

Distributions of owner-occupiers' housing wealth, debt and interest expenditureratios as financial soundness indicators


  • Lunde, Jens

    (Department of Finance, Copenhagen Business School)


The Danish housing market boomed from 1993 to the end of 2006. The house price increases from 2003 to 2006 were especially dramatic and cannot be explained satisfactorily by "fundamentals”. Moreover, the owner-occupiers are highly indebted; Denmark is the nation with the highest household debt/GDP, highest total liabilities/net wealth and highest mortgage debt/net non-financial wealth ratios among 15 OECD countries. Obviously, an analysis of the financial soundness of owner-occupiers is topical in order to analyse financial stability in society. The financial soundness of Danish owner-occupier families is analysed using relevant financial indicators for the owner-occupiers’ capital structure and interest payments. Tax statistics for the owner-occupier families are used here. In a financial soundness perspective macro data are of limited importance as they express total and average changes. Distributional data at the micro level, formed at the family (household) level, are important for recognizing changes in the financial soundness of the nation. The data are used to estimate important financial indicators as debt/income, housing wealth/income, debt/housing wealth and net interest expenditure/income ratios for the families’ total financial situation and capital structure. The result is that the financial soundness of Danish owner-occupiers, measured as net liability housing wealth ratios, has not improved since the owner-occupation crisis in the years 1987-1993. Furthermore, their housing wealth/income and net liability/income ratios have increased since 1993 to "all-time high” levels, just as in the other OECD countries; net interest expenditure/income ratios have been reduced in a before-tax perspective, but not much in an after-tax perspective. The substantial heterogeneity of the families is considerably reduced by adjusting for age as a proxy for the life cycle. Moreover, the income variation is also reduced considerably within each age group.

Suggested Citation

  • Lunde, Jens, 2007. "Distributions of owner-occupiers' housing wealth, debt and interest expenditureratios as financial soundness indicators," Working Papers 2007-1, Copenhagen Business School, Department of Finance.
  • Handle: RePEc:hhs:cbsfin:2007_001

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item



    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:cbsfin:2007_001. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lars Nondal). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.