the disposable income. that is kr. 1. 2 million per household on average, which is high in a long - term perspective and higher than before 2003, when the most recent upswing began. owner - occupied housing accounts for approximately half of all household wealth, while shares make up an estimated 15 - 20 per cent, including shares owned indirectly by way of pension savings. overall, the finances of danish households are therefore still sound, not only because of the capital gains reaped during the upswing, but also because net savings have been positive for a long time – in the range of 5 - 10 per cent of annual disposable incomes. this prudence pays off now that the economy is moving in the opposite direction. but the fact remains that some people may find themselves in a fix. the fall in housing prices means that an estimated 110, 000 danes have debt - to - value ratios exceeding 100 per cent – they are " technically insolvent " and thus at risk if incomes go down or they are otherwise forced to sell their homes. * * * let me now turn to the financial markets. all european markets for mortgage bonds were affected by the financial turmoil after lehman brothers had filed for chapter 11 in september last year. attention suddenly focused on the credit risk on mortgage bonds. the yield spread between mortgage and government bonds widened in denmark and in comparable countries. the initiatives taken to support the danish pension sector at the end of october curbed the widening of the yield spread between mortgage and government bonds, which returned to the level just before the lehman brothers episode. adjustable - rate loans account for a large part of the danish mortgage market. for the lion's share of these loans, the rate of interest is fixed in december. the financial turmoil in the autumn demonstrated all too clearly that there is a considerable risk for both borrowers and issuers if interest rates are fixed only once a year. danmarks nationalbank is in favour of spreading issuance of adjustable - rate loans to other months than december. * * * developments in september and october 2008 showed that at times it is necessary to intervene to support the krone. in such situations, the foreign exchange reserve serves as a buffer that allows danmarks nationalbank to maintain a fixed exchange rate against the euro. in addition to intervening in the foreign - exchange market, danmarks nationalbank raised its policy interest rates. at the time, risk aversion in the markets was high, so a given

the future development in prices of owner - occupied homes have dampened, so that property is not bought chiefly to achieve a capital gain. the change of mood seems to have been most pronounced in the greater copenhagen area, and it is also in copenhagen that house prices have recently fallen, especially for owner - occupied flats. this reflects that prices per square metre have reached a very high level, and that the supply of newly - built homes has augmented. construction always reacts to rising house prices with a certain time lag. economic growth in greater copenhagen is still strong, however, and prices will be underpinned by the influx of new residents from the rest of the country. three quarters of denmark's owner - occupied homes are located outside greater copenhagen. in most areas, prices have risen more slowly, and price falls are less likely. the higher prices per square metre in recent years have strongly augmented housing wealth, which has increased by kr. 670 billion since the start of 2005. borrowing has also risen, but not by any means to the same extent. home equity has grown by an estimated kr. 550 billion over two years. this ensures that there is a significant buffer against any future price drops. rising house prices are first and foremost to the benefit of those of us that already own a home. the majority of the population are homeowners and this is probably one of the reasons that the high price increases have not provoked strong protests. stagnating and perhaps falling house prices will be to the benefit of first - time home buyers. for those who bought their homes when prices peaked any price drops will naturally be less welcome. however, only a small proportion of the owner - occupied homes changed hands at the very high prices. around 5 per cent of one - family houses in denmark are sold each year, so that for most homeowners a small price drop will just mean that a small part of the capital gain that emerged so quickly will disappear. the increase in interest rates moreover diminishes the market value of the outstanding debt, unless the home is financed at variable interest rates. danmarks nationalbank assesses that in the short term the slowdown in the housing market will have only a limited effect on the economy in general. once the construction backlog has been eliminated, new construction and conversion activity will probably dampen, but that is still far off, and furthermore, business construction is increasing. in addition, private consumption has only been affected by the increasing housing wealth