Mortgage rates in the world: a Danish bank pays buyers to take out loans

The frenzied run to zero or negative interest rates around the world has just taken a new step: a Danish bank pays home buyers to take out mortgages.

Jyske Bank, Denmark's third largest lender, announced a mortgage rate of -0.5% in early August, before fees. Nordea Bank, meanwhile, offers 30-year mortgages at an annual interest rate of only 0.5%.

Years of easing central banks have altered interest rates around the world, thus distorting the traditional economic data of loans and borrowings. It is especially in Europe that the composite mortgage rate in the euro area fell to 1.65% in June, the lowest since the start of the records in 2000, according to Bloomberg.

While some regions have weathered the trend, borrowing costs are at or near low in many major global markets. This has boosted buyer demand and created fierce competition among lenders.

Here's an overview of mortgage rates around the world:

United Arab Emirates

In recent years, mortgage rates in the UAE have steadily risen alongside those of the US Federal Reserve. However, this year rates remained stable, with some of the major lenders having even slightly reduced them.

The fixed average rates are now about 3.89% set for three years and the variable rates at 3.99%. Rates for non-residents wishing to invest in the country have always been slightly higher than those of residents, now standing at around 4.49%, according to the United Arab Emirates Mortgage Finder mortgage website.

With the dirham pegged to the US dollar, the country's mortgage rates are influenced by the US economy and the Federal Reserve's policies. Earlier this year, the Fed said it would not raise interest rates for the coming year, remaining stable between 2.25 and 2.5%.

"We hope that news from the US Federal Reserve will encourage more UAE banks to feel confident in lowering mortgage rates and offering more varied mortgage products to residents and non-residents," said Chris Schutrups, Director. General Mortgage Finder.

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The 30-year average US mortgage rate is 3.6%, its lowest level since November 2016. The resulting increase in housing demand has raised total mortgage debt to $ 9.4 trillion. second quarter, exceeding the peak reached in 2008. financial crisis. Mortgage brokers are also quick to respond to the demand for refinancing: claims have reached their highest level in three years.

The benefits for homebuyers are however limited in cities such as New York and San Francisco because the boom has resulted in a shortage of affordable housing.

la France

French mortgage rates reached a low of 1.39% on average in June, according to data from the Banque de France. The country's banking sector is extremely competitive: many lenders have tried to attract customers with cheaper offers.

Germany

German mortgage rates have also hit record lows this year, with the 10-year average loan currently below 1%. Some lenders offer rates of around 0.5%, according to Interhyp, a comparison site.

The prospect of a further decline in benchmark borrowing costs could drive many mortgage rates to zero. This could, however, have a limited impact on the residential market: only 46% of Germans own property, compared to an average of 69% in the EU.

United Kingdom

On the other hand, mortgage rates in the United Kingdom remained virtually unchanged this year, despite lower borrowing costs in a context of worsening economic prospects. The rate applied to a two-year fixed mortgage decreased by only 8 basis points from January to July, compared to a 38 basis point decline in swaps over two years.

One of the reasons, according to Mark Gilbert of Bloomberg Opinion, is that the regulator of the Bank of England has discouraged lenders from trying to conquer market shares by easing standards because it feared for their financial strength .

Hungary

Mortgage costs are quite high in Hungary as regulators have diverted almost all borrowers from cheaper (but less secure) floating rate loans. A 10-year fixed rate mortgage is currently around 5%, while money market rates are close to zero.

The lure of security has been reinforced by the memory of a fashion for mortgages taken out in Swiss francs before the financial crisis. The subsequent fall of the forint against the franc hit up to 1 million Hungarians.

Greece

Mortgage rates rose in Greece, weighed down by sovereign debt and corporate debt. The average variable rate home loan was 3.08% in June, an increase of 11 basis points over the previous year.

Greek banks have a mountain of antiquated loans, which prevents them from making new loans, even when they are guaranteed by a house.

Hong Kong

Mortgage rates are also rising in Hong Kong as the political crisis weakens the appetite for credit. HSBC and Standard Chartered both increased their effective rates by 10 basis points to 2.48% in July, according to Bloomberg Intelligence.

Japan

The Bank of Japan's negative interest rate policy has kept housing loans affordable. A 10-year fixed rate mortgage can be contracted at around 0.65% and Sumitomo Mitsui Trust offers a rate as low as 0.53%.

This boosted real estate purchases and prices, in large cities, helping to reverse the years of decline that followed the bursting of the market bubble in 1991. Residential land prices in the metropolitan area Tokyo rose 1.3% last year, while those outside major urban areas rose 0.2%, the first rebound in 27 years. However, at the national level, prices represent only 38% of their 1991 levels, according to the Land Ministry.

Australia

Mortgage rates fell by about 40 basis points as a result of consecutive cuts in Australian central bank interest rates in June and July. The average standard variable rate charged by the four largest lenders in the country is currently 4.94%.

Falling mortgage rates, easing credit rules, and the surprise re-election of the center-right government led to the Australian real estate market. After a two year decline, real estate prices in Sydney have risen over the past two months.

South Africa

The cost of a home loan remains relatively high in South Africa. The prime lending rate for banks is about 10% and mortgage borrowers can expect to pay between two and five percentage points more.

As banks begin to make more loans to gain market share, mortgage rates are not expected to drop much. Inflation is generally high and the central bank has maintained its benchmark rate above 6% since 2015.

Nigeria

Nigeria has been experiencing double-digit inflation since 2016, with equivalent mortgage rates of up to 30%. Those who contribute a small percentage of their income to the public bank can get a much cheaper rate of 9% on the National Housing Fund.

Mortgage underwriting is low due to high rates, low incomes and a long wait for government guaranteed loans.