Negative Rate Mortgages: You Are Now Paid To Take Out A Mortgage
In Denmark You Are Now Paid To Take Out A Mortgage
Courtesy of Zero Hedge.
Thanks of Mario Draghi’s generosity with “other generations’ slavery”, and following 3 consecutive rate cuts by the Danish Central Bank, a local bank – Nordea Credit – is now offering a mortgage with a negative interest rate! This means, according to DR.dk, that Nordea have had to pay instead of charging interest to to a handful of customers, says housing economist at Nordea Kredit, Lise Nytoft Bergmann for Finance.
From DR, google-translated:
The interest rate has balanced around 0 in a level between minus 0.03 percent plus 0.03 percent. Most have paid a modest positive interest rate, but there are so few who have had a negative rate. It is quite an unusual situation, says Lise Nytoft Bergmann.
It is residential customers who have chosen to stick with F1-loan that now benefit from the negative interest rate. F1 loan form has otherwise been strong returns in recent years in favor of fixed interest loan.
Although interest rates are negative, it is not something that can be felt by customers as contributions and other costs continue to be paid. In turn, interest will be deducted from the contribution.
Precisely because it is an unusual situation, Nordea Kredit’s IT systems are not geared to the situation when the computers are only used to collect interest.
Lise Nytoft Bergmann says that there is no cause for concern, and that the new situation can be handled, “but sometimes we have to use duct tape and paste.”
This is just the beginning: according the Danish media outlet, as a result of variable-refinancing, as recently as a week from now “a greater share of customers could have a negative rate.”
Mortgage Denmark is one of the mortgage banks, where F1 rate also is close to zero, and here you are very excited about the upcoming negotiations, says Christian Hilligsøe Heinig, chief economist of the Mortgage Denmark.
We have an auction just around the corner and it is very exciting to see how interest rates are going. We can go and get negative interest rates, says Christian Hilligsøe Heinig to JP Financial.
And just like that, first in Denmark, and soon everywhere else in Europe, a situation has now emerged where savers who pay the bank to hold their cash courtesy of negative deposit rates, are directly funding the negative interest rate paid to those who wish to take out debt. In fact, the more debt the greater the saver-subsidized windfall.