During the euro crisis struggling Mediterranean economies were discovered to have been living far beyond their means. Northern Europeans sniffed at the southerners' spendthrift ways. But not all northerners are the epitome of parsimony: Danish households have the highest debt as a share of disposable income among the 34 members of the oecd, a club of mostly rich countries. Their spending binge is beginning to look no more sustainable than that of the feckless southerners. The culprit, as in so many other places, is the housing market. In 2004 only 10% of Danish mortgages had long interest-only periods, during which borrowers repaid none of the principal. By 2013 that number had climbed to 57%. Over the intervening decade, property prices soared as Danes rushed into the market. Banks financed themselves through mortgage-backed securities, promising investors fat yet seemingly riskless returns: mortgage bonds have a 200-year history in Denmark, and none has ever defaulted.
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