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Danish Bank to offer negative interest rate on 10-year fix mortgage

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  • 09/08/2019
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Danish Bank to offer negative interest rate on 10-year fix mortgage
A Danish Bank is preparing to offer borrowers negative interest mortgage rates on 10-year fixes, meaning it will be paying them to borrow money.

 

According to reports, the move was confirmed by the country’s third largest financial institution Jyske Bank this week as a reflection on the wider economy.

The bank will be offering a 10-year fix at -0.5 per cent interest, meaning borrowers will need to only pay back 99,500 Danish Krone of every 100,000 Krone they borrow if they pay it off in full at the end of the term.

Christian Bech-Ravn, head of ratings and investor relations at Jyske, told Bloomberg that it was a first for all Danish mortgage institutions.

But he was concerned about the underlying reasons behind it, adding that the very low interest levels were not a very good sign for the economy.

Mikkel Høegh, a housing economist at the bank also told media that this would not have been possible a few months ago, but that the situation was continuing to produce surprises.

Bloomberg added that investment mortgage bonds have been available since May at negative interest rates in Denmark, but this was the first opportunity for retail borrowers.

 

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