Friday, August 9, 2019

10-year fixed-rate mortgage with an interest rate of -0.5%.

A Danish bank is offering mortgages at a 0.5% negative interest rate — meaning it is basically paying people to borrow money

To put the -0.5% rate in simple terms: If you bought a house for $1 million and paid off your mortgage in full in 10 years, you would pay the bank back only $995,000.

Posted by cornishman @ 02:56 PM (1303 views)
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5 thoughts on “10-year fixed-rate mortgage with an interest rate of -0.5%.

  • ===========================
    Many investors fear a substantial crash in the near future. As such, some banks are willing to lend money at negative rates, accepting a small loss rather than risking a bigger loss by lending money at higher rates that customers cannot meet.

    The financial world seems as irrational as the dot com boom mantra that it didn’t matter if companies made no profits had little revenue but okay they were in ftse100 and ftse250

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  • Yup, as suggested before how negative rates are possible by ECB and people can still make money.

    Bank will pay customers to take out mortgages by offering negative interest rates in Denmark. Similar article on yahoo finance.

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  • tenyearstogetmymoneyback says:

    Did you notice the mention of fees ? That seems to be the new business model /scam.
    I am fed up of my credit card issuer sending me offers like a 0% 18 month balance transfer.
    When you read the small print you find there is a 3% transfer fee. Far higher than any of their savings accounts.

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  • stillthinking says:

    If you pay back 5K less, then you are effectively given 5K. The banks must also be effectively paid by the central bank to administer the loan.Which is fair enough as a subsidy from the central bank, printed money, but how do you control an ever increasing spiral of transaction quantity and prices? So affordability is a block on ever increasing house prices, also expectation of price movements, there are brakes. But what are the brakes in this case? They must be administrative by availability rules.So this window is a temporary goose to target house prices and inflation. However, its not a fair redistribution of wealth so I guess the Danes will be pretty miffed.

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  • At some stage deflation will hit housing hard. The bigger question is will that house be worth 1 million in ten years time or could it be worth half of that?

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