Negative Mortgages Set Another Milestone in No-Rate World


Where central banks led, mortgage loans continued in most markets.

In this way, it is appropriate to say that the vertiginous fall of the world at zero or negative interest rates has just passed another milestone since homebuyers in Denmark are effectively paid to take out 10-year mortgages.

For its part, Jyske Bank A / S, the third-largest lender in Denmark, announced in early August a mortgage rate of -0.5%, before the commissions. Meanwhile, Nordea Bank Abp offers 30-year mortgages with an annual interest of 0.5% and 20-year loans at zero. Thus, it is understood that the years of easing by central banks hacked interest rates worldwide, distorting the traditional lending economy, which could be said to be more pronounced in Europe.

Fierce competition

Certainly, it is some regions that have resisted the trend, borrowing costs are at the lowest level in many of the major world markets. That being the case, it could be said that it boosted the demand for homebuyers, thus stimulating real fierce competition among lenders for their businesses.

Likewise, it is convenient to bring up data such that the average 30-year US mortgage rate is 3.6%, the lowest since November 2016. A resulting increase in the demand for housing sent the total mortgage debt to $ 9.41 billion. in the second quarter, exceeding the peak reached during the financial crisis of 2008.

It has been said that for their part, mortgage brokers also rush to keep up with the demand for refinancing and that the applications are being executed in a maximum of three years.

However, the benefits for homebuyers are reduced in cities such as New York and San Francisco, because the boom has caused a shortage of affordable housing.

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Source: Oliver Telling | Bloomberg

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