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Many investors fear financial collapse in the near future
The Danish bank Jyske Bank, the third largest bank in the country, announced last week that its customers would now be able to take out a 10-year mortgage with a fixed interest rate of -0.5%, which means that customers would return less than the money received at the bank. .
In other words, if you subscribe to a $ 1 million home loan and pay off the mortgage in 10 years, you would only pay $ 995,000 to the bank, reports BusinessInsider. However, it should be kept in mind that, even with a negative interest rate, banks often charge fees related to the lending process – so that customers can always pay more than they have borrowed.
The Jyske Bank offer is another mortgage loan proposal with extremely low interest rates (in this case even a negative rate) given by homeowners in Denmark.
Nordea Bank, the largest lender in Scandinavia, will offer a 20-year mortgage with a 0% interest rate, according to The Local, and Bloomberg notes that some Danish lenders are proposing a 30-year mortgage at a rate of 0.5%.
It may seem illogical that banks lend at such low interest rates, but there is an explanation for this. Financial markets are now in an unstable and uncertain situation. Risk factors are the ongoing trade war between the United States and China, Brexit and the slowdown in global economic growth, especially in Europe.
Many investors fear a financial collapse in the near future. As a result, some banks are willing to lend money with negative interest rates and suffer smaller losses than they would lose if they borrow at higher rates than customers would be able to repay.
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