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Tuesday, August 13th, 2019

20-Year Mortgages Hit Zero for First Time in Danish Rate History

Author:     Frances Schwartzkopff
Source:     Bloomberg/msn money
Publication Date:     11 August 2019
 Link: 20-Year Mortgages Hit Zero for First Time in Danish Rate History
Stephan:   Wouldn't you love to have a zero interest mortgage? So would I. They have them in Denmark, where people are also better educated, healthier, more affluent, have no concerns about medical care costs, and live longer. Also they don't have mass shootings every other day. I'd say what do they know that we don't, but the truth is we do know what to do, we just don't do it because we only have one social priority and that is profit.

Danish neighborhood

In Denmark’s $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.

The development follows an announcement earlier in the week by Jyske Bank A/S, which said it will start issuing 10-year mortgages at a coupon of minus 0.5%. Danes can also now get 30-year mortgages at 0.5%, and Nordea recently adjusted its prospectus to allow for home loans up to 30 years at negative interest rates.

Danish 10-year government yield breaches minus 0.5%© Bloomberg Danish 10-year government yield breaches minus 0.5%

“It’s never been cheaper to borrow,” Lise Nytoft Bergmann, chief analyst at Nordea’s home finance unit in Denmark, said in an email. “We expect this to contribute to driving home prices higher.”

Though good news for homeowners, Bergmann said the development is “almost eerie.”

“It’s an uncomfortable thought that there are investors who are willing to lend money for 30 years and get just 0.5% in return,” she said. “It shows how scared investors are of […]

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