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Danish bank launches negative interest rate mortgage

theguardian.com

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Re: Danish bank launches negative interest rate mortgage

#11

Post by sleepysysadmin »

Not the world's first at all. https://tradingeconomics.com/switzerland/interest-rate

Switzerland has been negative for years.

Negative interest rates mean only 1 thing. The central bank is 100% confident that they are on the brink of deflationary spiral; much like Greece or Japan.

This is all connected:

https://news.ycombinator.com/item?id=20615403

https://news.ycombinator.com/item?id=20654624

https://tradingeconomics.com/canada/households-debt-to-incom...

When you are above 100% disposable debt to income. It means you must stop spending or your debt continues to increase. 170% is worse than the USA's financial crisis. Other countries like Australia are up around 200%.

We have reached a long term debt cycle. We are about to have one of the worst recessions in a very long time OR depression.

Re: Danish bank launches negative interest rate mortgage

#13

Post by apo »

kebman wrote: post #6
apo wrote: post #4

This is all the more surprising given that inflation in Denmark is running ~1%/year. That means the bank is absorbing a real loss of 1.5%/year on the deal. Meanwhile, the housing market is roaring: https://tradingeconomics.com/denmark/housing-index It would be one thing to see negative rates in a declining property market and/or in a deflationary environment. However, negative rate mortgages are happening in what loo…

As far as I know, fees and charges on the loan make it about 2% anyway. Still a pretty cheap loan, I'd say.

Good point - updated answer with a link. Hopefully there's a better one out there.

Re: Danish bank launches negative interest rate mortgage

#14

Post by UnFleshedOne »

aszantu wrote: post #2

what does that mean for poor people, does someone know? Can someone explain?

Poor people are screwed up regardless -- if rates are high, they can't afford payments, if rates are low, prices rise and they still can't afford payments. Not to mention getting downpayment.

Workaround: don't be poor.

Re: Danish bank launches negative interest rate mortgage

#16

Post by chvid »

aszantu wrote: post #2

what does that mean for poor people, does someone know? Can someone explain?

For poor people it means that your rent continues to rise, house prices become further inflated and you will still pay massive interest rates if you get a consumer loan.

Re: Danish bank launches negative interest rate mortgage

#17

Post by jjoergensen »

Buying a house means taking over a payment and tax liability, it's not just about owning and controlling an asset. Confidence in the financial system is apparently so low that someone is willing to pay you fictitious money now in return of fewer actual cash in the future.

Re: Danish bank launches negative interest rate mortgage

#18

Post by dsfyu404ed »

UnFleshedOne wrote: post #14
aszantu wrote: post #2

what does that mean for poor people, does someone know? Can someone explain?

Poor people are screwed up regardless -- if rates are high, they can't afford payments, if rates are low, prices rise and they still can't afford payments. Not to mention getting downpayment. Workaround: don't be poor.

The down payment is the hardest part. "Just barely able to make payments" people are better off when rates are high because that depresses prices resulting in a lesser dollar amount for whatever the down-payment is.

Re: Danish bank launches negative interest rate mortgage

#19

Post by kgwgk »

Not really. “As a result, oddities now abound. Danish lender Jyske Bank last week issued a 10-year mortgage bond at an interest rate of minus 0.5 per cent, meaning homeowners are being paid to borrow.”

In fact the providers of the capital will pay the bank for those mortgage-backed bonds (they get a negative yield). The bank will get some spread from the client, who will also pay.

https://www.google.ch/amp/s/amp.ft.com/content/820e3aac-ba1a...

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