Author Topic: 20-Year Mortgages Hit Zero for First Time in Danish Rate History  (Read 1424 times)

Mackin USA

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(Bloomberg) -- In Denmarkís $495 billion mortgage-backed covered bond market, another milestone was reached on Wednesday as Nordea Bank Abp said it will start offering 20-year fixed-rate loans that charge no interest.

https://www.msn.com/en-us/money/news/20-year-mortgages-hit-zero-for-first-time-in-danish-rate-history/ar-AAFtb2Z#page=2
Mr. Mackin

Rumbas

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Re: 20-Year Mortgages Hit Zero for First Time in Danish Rate History
« Reply #1 on: August 09, 2019, 12:22:18 PM »
It's insane and goes against everything we learned about financing.

littleman

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Re: 20-Year Mortgages Hit Zero for First Time in Danish Rate History
« Reply #2 on: August 09, 2019, 05:09:06 PM »
I don't understand how this could work unless there is some type of subsidy that is hidden.  Big investors  are likely to come in and buy up all the property -- pushing up prices out of reach for common folk.

Rumbas

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Re: 20-Year Mortgages Hit Zero for First Time in Danish Rate History
« Reply #3 on: August 11, 2019, 09:08:57 PM »
You have to pay an enormous amount of administration fees and other bs. House always wins.

Mackin USA

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Mr. Mackin

Mackin USA

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Re: 20-Year Mortgages Hit Zero for First Time in Danish Rate History
« Reply #5 on: September 23, 2019, 10:05:19 AM »
Banks Just Changed the Rules of the Negative Rate Game for Danes
https://finance.yahoo.com/news/banks-just-changed-rules-negative-040000108.html
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littleman

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Re: 20-Year Mortgages Hit Zero for First Time in Danish Rate History
« Reply #6 on: September 23, 2019, 05:53:02 PM »
It is kind of weird for me to be inline with zerohedge on an issue...

Quote
Negative interest rates are just the latest front in the post-2008 era of "extraordinary" monetary policy. They represent a Hail Mary pass from central bankers to stimulate more borrowing and more debt, though there is far more global debt today than in 2007. Stimulus is the assumed goal of all economic policy, both fiscal and monetary. Demand-side stimulus is the mania bequeathed to us by Keynes, or more accurately by his followers. It is the absurd idea, that an economy prospers by consuming and borrowing instead of producing and saving. Negative interest rates turn everything we know about economics upside down.

Under what scenario would anyone lend $1,000 to receive $900 in return at some point in the future? Only when the alternative is to receive $800 back instead, due to the predicted interventions of central banks and governments. Only then would locking in a set rate of capital loss make sense. By "capital loss" I mean just that; when there is no positive interest paid, the principal itself must be consumed. There is no "market" for negative rates. The future is uncertain, and there is always counterparty risk. The borrower might abscond, or default, or declare bankruptcy. Market conditions might change during the course of the loan, driving interest rates higher to the lender's detriment. Inflation could rise higher and faster than the agreed-upon nominal interest rate. The lender might even die prior to repayment.

ergophobe

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Re: 20-Year Mortgages Hit Zero for First Time in Danish Rate History
« Reply #7 on: September 23, 2019, 11:16:45 PM »
Episode 940: Interest Rates... Why So Negative?

https://www.npr.org/2019/09/20/762748958/episode-940-interest-rates-why-so-negative

Good explainer that was helpful for me. Two big takeaways

1. This could go on for very long time

2. When recession hits, cutting interest rates is off the table, so the only option for a government to do something is to borrow a lot and spend a lot. Donít expect deficits to fall any time soon