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 looks like a normal economy with low inflation and red-hot housing market.
Somebody is very wrong about one or more of the following:
- the future direction of the housing market
- the future direction of interest rates
- the future direction of inflation
Edit:
Google translate sheds some light. It appears that the Danish equivalent of "points' clouds the picture:
> Total repayments before tax DKK 277,392 (on a DKK 250,000 loan) - of which total interest and contributions DKK 8,264 changes in the exchange rate will affect the size of the amount paid out.
https://translate.google.com/translate?hl=en&sl=auto&tl=en&u...
Low, but not negative.
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 looks like a normal economy with low inflation and red-hot housing market.
Somebody is very wrong about one or more of the following:
- the future direction of the housing market
- the future direction of interest rates
- the future direction of inflation
Edit:
Google translate sheds some light. It appears that the Danish equivalent of "points' clouds the picture:
> Total repayments before tax DKK 277,392 (on a DKK 250,000 loan) - of which total interest and contributions DKK 8,264 changes in the exchange rate will affect the size of the amount paid out.
https://translate.google.com/translate?hl=en&sl=auto&tl=en&u...
Low, but not negative.