Somewhat completely off topic, but with interest rates "skyrocketing" compared to recent history, would it be feasible to "buy back" one's fixed rate debt? Or sensible?
If you have a 2% loan, and interest rates skyrocket to 10%, you absolutely do not sell your 2% loan to reup to 10%. That's just stupid. You keep the 2% loan and even try to slow down payments (if you were double-paying or otherwise cutting down principal before, you stop doing that).
All you gotta do is put a dollar value on it, which is actually relatively easy. Just calculate the approximate worth of 2033 dollars vs 2023 dollars, and adjust the prices today to match your expectations.
There "is no risk" in US Treasuries because we're screwed if there are risks. (Aka, everyone ignores things like the Debt Ceiling debate).
It's equivalent to buying the bond that represents the debt you owe.
Larger debt ends up in negotiations over the amount owed. War debt after WW1 resulted in greatly reduced repayments based on the original lending.
If you are a default risk on debt that has weak collateral, you could probably come to some agreement that pays back some fraction of the principal.
If you no longer need the debt, i.e. you have the cash to pay it back, you could _theoretically_ loan out that cash to someone else at the higher current market interest rate. Loaning money involves credit risk of course, so practically this would mean buying something like higher interest paying Treasuries or AAA bonds. Effectively, the spread between your borrowed fixed rate debt and the bonds you bought are the _profit_ you make, the NetPresentValue of which is roughly what you would get if you could "buy back" the debt.
I am ignorant of current and previous Danish mortgage interest rates. Assuming a 2% mortgage from a few years back, and current interest rates at say 6%, I would expect to buy back at less than 85% value.
If I wanted to buy back my house's mortgage from the bank, they'd ask me to pay the full principal.
But if JP Morgan buys it off SVB, they'd discount the mortgage and pay either 80 cents to the dollar or 50 cents (!), while they get to collect the whole principal & interest back from me as I repay.
What if I could buy it off SVB at fire sale prices, instead of some other financial firm?
This is probably most relevant when you think of medical debt, for example John Oliver's medical debt give away where he bought 14.9 millon dollars in debt for 60k & just forgave it through a non-profit (because debt forgiveness is a taxable event, which is just a tax loophole otherwise).
If you owe a hospital a million dollars and they are willing to sell it for 100k, why should you keep owing a million after its been sold for that price?