Danish bank launches negative interest mortgage

A bank in Denmark has launched a mortgage with an interest rate of minus 0.5 per cent in what is believed to be a world first.

Jyske Bank is offering customers the choice between a seven or ten-year fix with a negative rate, The Guardian reports.

Rather than actually being paid to borrow money by the bank, customers instead see their outstanding mortgage debts reduced by more than the sum they repay each month.

But on its website Jyske Bank explains that home buyers will not actually make money from borrowing due to charging arrangement fees.

Jyske’s housing economist Mikkel Høegh describes the situation as “almost absurd” and says that he can “hardly understand” how it is possible.

According to an illustration on the bank’s website a borrower who took out a 250,000 Danish Krone mortgage — equivalent to around £31,000 — would repay a total of 277,392 Krone over ten years after costs, or £34,397. 

If the same borrower took out the seven-year deal they would repay 274,937 Krone or £34,092.

Another Danish lender, Nordea, is to offer 20-year home loans at 0 per cent.

The Danish central bank’s official lending rate is current 0.05 per cent, while the European Central Bank’s main rate is 0 per cent and in Sweden the official rate is already negative at -0.25 per cent and in Switzerland it is even lower at -0.75 per cent.

According to the Financial Times, bonds worth $15tn are currently trading with negative yields, which has created the bizarre situation whereby some banks such as Jyske can borrow so cheaply that they are able to offer flat or even below-zero mortgage rates.


European property investors return to London

Interest in the London housing market among European investors has returned for the first time following the Brexit vote fallout. The Times reports that the number of homes across the capital sold to a buyer from the European Union rose to 13 per cent in H1, up from 10 per cent in the same period […]


Europe debates self-cert securitisation ban

The European Parliament is debating tweaks to laws that would ban the securitisation of self-cert mortgages. The EP is today discussing draft Securitisation Regulation laws. If passed, the current version of the laws would ban lenders in the European Union from securitising mortgages where consumers self-certified income. The parliament is debating an amendment that would […]


HSBC clients seek Europe move ahead of Brexit

Some of HSBC’s larger clients are asking for their business to be moved from the UK to offices in mainland Europe before a final Brexit deal is struck. HSBC head of global commercial banking Noel Quinn told Bloomberg said that some high-net-worth clients wanted to make sure they could keep trading regardless of what happens […]

Frexit & contagion risk in Europe

Many commentators have suggested that the UK’s exit from the European Union will trigger a domino effect, leading to its eventual break-up. Neptune’s Rob Burnett discusses the likelihood of this happening. Read more: Important information Investment risks Neptune funds may have a high historic volatility rating and past performance is not a guide for future […]

Stop letting targets get in the way of delivery

The positivity at RESI was pleasing to see, with lots of encouraging discussion about the private rented sector (PRS), the possibility (or hope) of stamp duty cuts on the way in the Autumn Statement and the general prospects of residential property in this post-Brexit vote world. However, that positivity was often tinged with some negativity […]


News and expert analysis straight to your inbox

Sign up

Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now