europe is printing so much money they have no idea what to do with it

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Mortgage rates

Danish bank launches world’s first negative interest rate mortgage

Jyske Bank will effectively pay borrowers 0.5% a year to take out a loan

Patrick Collinson

Tue 13 Aug 2019 16.15 BSTLast modified on Tue 13 Aug 2019 20.25 BST

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A Danish bank has launched the world’s first negative interest rate mortgage – handing out loans to homeowners where the charge is minus 0.5% a year.

Negative interest rates effectively mean that a bank pays a borrower to take money off their hands, so they pay back less than they have been loaned.

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Jyske Bank, Denmark’s third largest, has begun offering borrowers a 10-year deal at -0.5%, while another Danish bank, Nordea, says it will begin offering 20-year fixed-rate deals at 0% and a 30-year mortgage at 0.5%.

Under its negative mortgage, Jyske said borrowers will make a monthly repayment as usual – but the amount still outstanding will be reduced each month by more than the borrower has paid.

“We don’t give you money directly in your hand, but every month your debt is reduced by more than the amount you pay,” said Jyske’s housing economist, Mikkel Høegh.

In recognition of how puzzling the new mortgage is for customers, the bank’s FAQis littered with questions and statements such as Hvordan kan det lade sig gøre?(How is that possible?) and Ja, du læste rigtigt (Yes, you read that right).

The mortgage is possible because Denmark, as well as Sweden and Switzerland, has seen rates in money markets drop to levels that turn banking upside-down.

Høegh said Jyske Bank is able to go into money markets and borrow from institutional investors at a negative rate, and is simply passing this on to its customers.

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I have heard about this negative interest rate but it does not make sense to me.

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Very confusing… (una buy kitu 1000 una lipa 900)

4

so how is the bank making money for it’s shareholders? sielewi hapo.

5

@uwesmake kuja ueleze hii maneno ya negative interest

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There are hidden/transaction fees that one pays. That’s how the bank makes money.
If you think that there’s anyone- let alone banks the greediest of corporations - in the business of losing money, you must be very naive

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they’ll probably use the value of the attached property to increase their position either in the stock market or for cash calls. there’s no way a bank can give out chums hivyo tu and make a loss.

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most fees are usually one off, in comparison to rates of 4% ,the fees are negligible., what @1776 looks plausible.

9

Money belongs to The Central Bank.

When a bank customer takes a loan, the bank registers an Asset.

The more loans, the bigger the bank.

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  1. Banks pay individuals to keep money:
    It is too expensive for a bank to just keep money readily available for when you want it (here to imagine people with large funds).