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Denmark offers homeowners 20-year loans at a fixed interest rate of zero

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Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#31

Post by karatinversion »

zo1 wrote: post #27
frafra wrote: post #12

Earlier quoted context omitted.

You are right about the house prices in Germany, but your statement about ECB is not entirely correct. ECB does not "insist there is no inflation" in Germany or in Europe: in both cases it has been around 2 % for the last 20 years: https://portal.dataviz.ecb.europa.eu/views/HICP_dashboard_ET... There is a reason why the ECB estimation of inflation (HICP) seems lower than expected in your experience: it does not take…

Well if house prices have indeed doubled in 10 years then that means inflation during that period was about 7.2%, not 2% as they claim. Saying inflation is 2% instead of 7% can be seen as "insisting there's no inflation". I.e. the statement was a bit of hyperbole to indicate that the ECB is hiding or misrepresenting the real rate of inflation. And without more detailed info, hiding/excluding inflation increases in on…

> Well if house prices have indeed doubled in 10 years then that means inflation during that period was about 7.2%, not 2% as they claim.

A rise in the price of one thing does not mean that rate is the rate of inflation - relative price shifts happen.

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#32

Post by yoshyosh »

TeMPOraL wrote: post #18
leokennis wrote: post #14

I'm very far from an economist. But in school I learned banks loan out "your money" to companies, for which they receive interest, which they also use to pay you interest. So when loaning money requires 0% of interest payments, and saving money pays out 0% of interest...that seems wrong?

Any amount of belief I had that I understand any of this has evaporated when I learned that negative interest rates are not only a thing, but also a thing we may all enjoy soon enough, and that they're apparently a good thing .

Any additional reading on this that you can link/refer to that gave you that realization?

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#33

Post by Cthulhu_ »

PartiallyTyped wrote: post #28
jcbrand wrote: post #2

House prices are driven upwards due to low interest rates, so this move will most likely only exacerbate the already high house prices. I'm not sure about Denmark, but in Germany house prices have about doubled in the last 10 years, (with the ECB insisting there's no inflation). Given the choice between high interest rates and cheaper house prices, versus low interest rates and expensive houses, I'd rather take the f…

I am paying a 950 euro rent for a <24 sq meters in Copenhagen, not downtown Copenhagen, inc water/electricity/heat/washer/drier. The situation is absurd. Back home (still in Europe) I paid half for 35-40 sq meters. Yes, the salaries offset some of it, but still..

The salaries you're eligible for offset some of it, but there are a lot of people that have to get by on minimum wage in the big cities as well.

Instead of making mortgages more attractive, I think governments should increase minimum wage. If they do a correction to match up with inflation (and cost of living, since the two don't seem to align), suddenly minimum wage will jump to €30/hour.

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#35

Post by Cthulhu_ »

pizza234 wrote: post #13
jcbrand wrote: post #2

House prices are driven upwards due to low interest rates, so this move will most likely only exacerbate the already high house prices. I'm not sure about Denmark, but in Germany house prices have about doubled in the last 10 years, (with the ECB insisting there's no inflation). Given the choice between high interest rates and cheaper house prices, versus low interest rates and expensive houses, I'd rather take the f…

I'm very skeptical at the following claim, if taken at face value: > Germany house prices have about doubled in the last 10 years In the capital, prices 10 years ago were extremely low. People who bought apartments between 10 and 20 ago bought them as low as 1000€/sqm, which is exceptionally low for a European capital. Under such conditions, price doubling is expected independently of any policy.

10 years ago was the peak of the housing bubble collapse (or just after), so the price of houses was depressed for a while.

That said, housing prices have gone up by ridiculous amounts since then, in part thanks to economic recovery, in part due to low mortgage interest rates, and in part (linked) due to low savings account rates. Better to put that money in real estate (and more risky investments on the stock market) than let it wither in a savings account.

But hey, for a while a few people made a lot of money.

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#36

Post by p1esk »

martin_bech wrote: post #22
pizza234 wrote: post #13

Earlier quoted context omitted.

I'm very skeptical at the following claim, if taken at face value: > Germany house prices have about doubled in the last 10 years In the capital, prices 10 years ago were extremely low. People who bought apartments between 10 and 20 ago bought them as low as 1000€/sqm, which is exceptionally low for a European capital. Under such conditions, price doubling is expected independently of any policy.

German housing is a litle different, as many prefer to rent, so less demand for beeing an owner.

Why do they prefer to rent?

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#37

Post by throwaway-8c93 »

ChuckNorris89 wrote: post #8
brtkdotse wrote: post #6

This is nuts. Housing inflation is rampant, I live in Sweden and my house value increased 40% in 5 years. We currently pay less per month for our 250 m2 house than my parents pay for their 75 m2 rental apartment.

Jesus, can yong folk afford to buy anything at this point?

I don't want to be the spoilsport, but yes, they very much can and it's not even that difficult.

Case in point: I moved to Finland as an immigrant 9 years ago, with nothing but a backpack, girlfriend and $12k in my bank account. Within 7 years, we paid down the mortgage for 100 m2 house in the capital area, while raising two children, with one above average and one below average income. And I don't feel like we were materially deprived in any way.

I think the main culprit is couples settling down way too late in their lives. Instead of settling down at the age of ~25 and combining two incomes to pay off the mortgage principle, we have two adults, each paying ~$700/month rents. When they finally move together at the age of ~30, that's almost $100k that went down the drain. The baby-boomer generation used to move together at even earlier ages, 19-22.

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#38

Post by raxxorrax »

pizza234 wrote: post #13
jcbrand wrote: post #2

House prices are driven upwards due to low interest rates, so this move will most likely only exacerbate the already high house prices. I'm not sure about Denmark, but in Germany house prices have about doubled in the last 10 years, (with the ECB insisting there's no inflation). Given the choice between high interest rates and cheaper house prices, versus low interest rates and expensive houses, I'd rather take the f…

I'm very skeptical at the following claim, if taken at face value: > Germany house prices have about doubled in the last 10 years In the capital, prices 10 years ago were extremely low. People who bought apartments between 10 and 20 ago bought them as low as 1000€/sqm, which is exceptionally low for a European capital. Under such conditions, price doubling is expected independently of any policy.

Berlin isn't representative. It has comparatively and surprisingly low prices on housing.

Don't know if prices doubled, but it is increasingly difficult for younger people to acquire a home.

People said the Euro helped Germany, and maybe that is correct, but that would be restricted to exporters. For almost everyone else it was a net loss.

Electronics got pretty cheap I guess...

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#39

Post by logicchains »

TeMPOraL wrote: post #18
leokennis wrote: post #14

I'm very far from an economist. But in school I learned banks loan out "your money" to companies, for which they receive interest, which they also use to pay you interest. So when loaning money requires 0% of interest payments, and saving money pays out 0% of interest...that seems wrong?

Any amount of belief I had that I understand any of this has evaporated when I learned that negative interest rates are not only a thing, but also a thing we may all enjoy soon enough, and that they're apparently a good thing .

>apparently a good thing.

For a very loose sense of apparent. It's heavily debated, and there's no empirical evidence of greater growth in countries with negative rates, in fact countries with negative rates are generally experiencing lower rates of growth than they were with high rates, although it's hard to disentangle correlation and causation here.

Re: Denmark offers homeowners 20-year loans at a fixed interest rate of zero

#40

Post by raxxorrax »

martin_bech wrote: post #22
pizza234 wrote: post #13

Earlier quoted context omitted.

I'm very skeptical at the following claim, if taken at face value: > Germany house prices have about doubled in the last 10 years In the capital, prices 10 years ago were extremely low. People who bought apartments between 10 and 20 ago bought them as low as 1000€/sqm, which is exceptionally low for a European capital. Under such conditions, price doubling is expected independently of any policy.

German housing is a litle different, as many prefer to rent, so less demand for beeing an owner.

True, if I have no chance to finance it, you prefer renting compared to homelessness.

But workplace mobility, yeah!

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