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IMF Urges Denmark to Drop Risky Mortgages as Losses Loom

The International Monetary Fund is urging Denmark to phase out interest-only mortgages or risk destabilizing its housing market, as lawmakers and lenders debate whether to aid borrowers unable to pay their loans.

“In many countries, this type of loan is forbidden, so it wouldn’t be given in the first place,” Yingbin Xiao, senior economist at the Washington-based IMF, said in a telephone interview. “Given that this is an option in Denmark, we think it would be prudent for them to phase them out gradually because of the risk. The Danish market already has experienced a correction.”