In Denmark You Are Now Paid To Take Out A Mortgage

Tyler Durden's picture

With NIRP raging in the Eurozone and over €1.5 trillion in European government bonds trading with negative yields, many were wondering when any of this perverted bond generosity will spill over to other debtors, not just Europe's insolvent governments (who can only print negative interest debt because of the ECB's backstop that it will buy any piece of garbage for sale in the doomed monetary union). In fact just earlier today we, rhetorically, asked a logical - in as much as nothing is logical in the new normal - question: 

Little did we know that just minutes after our tweet, we would learn that at least one place is already paying homeowners to take out a mortgage. That's right - the negative rate mortgage is now a reality.

Thanks of Mario Draghi's generosity with "other generations' slavery", and following 3 consecutive rate cuts by the Danish Central Bank, a local bank - Nordea Credit - is now offering a mortgage with a negative interest rate! This means, according to, that Nordea have had to pay instead of charging interest to to a handful of customers, says housing economist at Nordea Kredit, Lise Nytoft Bergmann for Finance.

From DR, google-translated:

The interest rate has balanced around 0 in a level between minus 0.03 percent plus 0.03 percent. Most have paid a modest positive interest rate, but there are so few who have had a negative rate. It is quite an unusual situation, says Lise Nytoft Bergmann.


It is residential customers who have chosen to stick with F1-loan that now benefit from the negative interest rate. F1 loan form has otherwise been strong returns in recent years in favor of fixed interest loan.


Although interest rates are negative, it is not something that can be felt by customers as contributions and other costs continue to be paid. In turn, interest will be deducted from the contribution.


Precisely because it is an unusual situation, Nordea Kredit's IT systems are not geared to the situation when the computers are only used to collect interest.


Lise Nytoft Bergmann says that there is no cause for concern, and that the new situation can be handled, "but sometimes we have to use duct tape and paste."

This is just the beginning: according the Danish media outlet, as a result of variable-refinancing, as recently as a week from now "a greater share of customers could have a negative rate."

Mortgage Denmark is one of the mortgage banks, where F1 rate also is close to zero, and here you are very excited about the upcoming negotiations, says Christian Hilligsøe Heinig, chief economist of the Mortgage Denmark.


We have an auction just around the corner and it is very exciting to see how interest rates are going. We can go and get negative interest rates, says Christian Hilligsøe Heinig to JP Financial.

And just like that, first in Denmark, and soon everywhere else in Europe, a situation has now emerged where savers who pay the bank to hold their cash courtesy of negative deposit rates, are directly funding the negative interest rate paid to those who wish to take out debt. In fact, the more debt the greater the saver-subsidized windfall.

That all this will end in blood and a lot of tears is clear to anyone but the most tenured economists, however in the meantime, we can't wait to take advantage of the humorous opportunities that Europe (and soon Japan and the US) will provide in the coming months, as spending profligacy will be directly subsidized and funded by the insolvent monetary system, while responsible behavior and well-paid labor will be punished, first with negative rates and soon thereafter: with threats, both theoretical and practical, of bodily harm.

h/t @AndreasBay

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ejmoosa's picture

You really can't make this stuff up.

SickDollar's picture

Give me some of that  F1-loan product Bitchez

NotApplicable's picture

So... instead of exploding ARMs, we've reached the land of imploding ARMs.

Seems there's no limit to those "Giant sucking sounds" as Ross Perot posited all those years ago.

All have the same cause though.

kaiserhoff's picture

If I can get that in "interest only"  I'm in;)

hedgeless_horseman's picture



We simply cannot have a Danish thread on ZH without Nicoline Toft.

Look at that ass!


What were we talking about? 

Negative interest rates. 


modric's picture

When i see women like that it makes me realise how much i have under achieved. A very bitter/sweet moment.

hedgeless_horseman's picture



MOAR Friday Night Music With A European Beat

Right click, open in new tab, and keep surfing ZH.

e_goldstein's picture

If these girls are candidates for the finishing school let me know how to donate to their education.

TruthInSunshine's picture

I will take out a mortgage (to build my own house, as in quality, not some shit box chicken coop) when the Paul Krugman Mortgage & Loan Company pays me 10% to borrow money on a non-recourse mortgage note.

Haus-Targaryen's picture

God I wish I had an extra 50-60k in the bank to grab a vaca house on the Danish West-Coast.  Rent that shit out and its money without end every Summer for the rest of my life. 

SoilMyselfRotten's picture

These Bankers are just the salt of the Earth, wonderful people who just want this to be a more caring place to live

kaiserhoff's picture

You say god will turn them into salt;) ?

Crawdaddy's picture

Only if they look back. And they will never look back.

Richard Chesler's picture

Is it at all possible for every part of the world to attain—one day in a plausibly not too remote future—the standard of living of say Denmark (and perhaps also similar political and cultural institutions)?


Pinto Currency's picture


How can an economy function properly with negative time value of money. - it can't.

There is a risk premium on top of this negative mortgage yield and, in reality, consumer goods inflation is positive - meaning that the central bankers expect people to lend out money for negative net yield.

A sign of economic collapse, however, few recognize it for what it is.

Stuck on Zero's picture

Chase Manhattan Mortgage offered me a 1.5% refi on a 20 year note.  My take is that they just want a loan on their books.  They don't have anyplace else to park their cash.  They also know that when the economy turns sour they will end up owning all the homes and we'll all be renters.

Never One Roach's picture

This has been going on in the USA for more then a decade; namely, when you hand a zero-down or low-down mortgage [and house] to people who cannot afford it, you [the taxpayers] are essentially subsidizing them. For while they handed buyers $8,000 to buy a house.


When this giant housing bubble bursts, as it inevitably will,  it wont be purty.

stocktivity's picture

Can I get NIRP on a new car?   Will they pay me a check each month to drive it?

Romney Wordsworth's picture
Romney Wordsworth (not verified) stocktivity Jan 31, 2015 7:37 AM

Maybe 'Sharia Laws' on usury aren't such a bad idea after all when you consider the weird shit that the moneylenders inevitable end up slopping on your plate.

7.62x54r's picture

"I would like a 100 year loan on this apartment complex, with no down payment, and payments exactly equal to the negative interest rate. I'd like one hundred of these loans, as I intend to buy this entire town. And you can see, from this business plan, that I will be more than able to meet all of my future payment obligations, without even touching the property income stream. I have $0.25 and this skate key as current assets."

cheech_wizard's picture

That's the damn problem with the Internet. Not everything that has been written about sustainability is on-line. I recall reading a study when I was much younger that in order to achieve such a goal, society would most closely resemble the agrarian culture of North Korea in the 1930's. I'll keep digging, it is out there somewhere.


Harbanger's picture

They can and will try this in the US next, Folks!  They need to keep the markets inflated at all costs.  Even if it means giving  free money to the plebs.

Steaming_Wookie_Doo's picture

Wow, think of the housing boom /s

But seriously, the avg person would be able to pay off their mortgage (at current pmt size) in about 12 yrs without having to fight thru all those interest deductions. "I for one, welcome our new Ant overlords."


daveO's picture

'At current payment size' is the operative phrase. Debt slavery works because the debt slaves always opt for the the lowest payment available, so they can then go buy other stuff on credit. 

willwork4food's picture

Perhaps Im not the sharpest tool in the shed, but this makes no sense. How can a bank opperate and make profit on NIRs????


zhandax's picture

Before now I could make this sound simple.  Now, I am not so sure.

As long as you collect more interest on your loans than you pay for your funds, you make money.  No one would argue that if you pay 8% for money and loan it out at 8.5%, you are, before any expense considerations, making money.

Here is the part I have never had to explain before.  When you cross from positive to negative rates, you substitute the word collect for the word pay for your funding and vice vera for your loans.  IOW, as long as you collect from your depositors more than you pay your borrowers, you make money.  Theoretically.  On a really gross basis.  This sounds like a good time for that second drink.

mkkby's picture

Just think thru how stupid this is.  With neg interest rate loans, nobody would be able to buy anything because the prices would soon be bid to infinity.  Article must be a fraud.

o2sd's picture

I don't think everyone gets the negative rate. The article states that mortgage rates are between -0.03% to 0.03%. My suspicion would be that the negative rates are offered to first time buyers to get them into the debt market on a variable rate, which the bank is sure will go back into positive territory in future when growth returns, Europe recovers and the sound of flutes fill the land.

I think the possibility that the rate will rise in the future would prevent excessive risk taking on the size of the loan. If it was me however, I would say "Fuck it" and borrow 20 million dollars. Even if they bankrupt you at some point in the future, you got to live like a boss before then.


zhandax's picture

No shit.  "when growth returns, Europe recovers"  The house will be paid off by then.

847328_3527's picture

Dave0 makes a great point. I went by a few model homes the other day and only one salesperson discussed the actual prices of the houses. The others kep talking about "What can you afford to pay monthly." Sales techniques like these are used buying a used car or a dress on lay-away at KMart since they know the buyer will be shocked if they told them the actual overpriced cost of the wooden box some call "a house" and realize there is no frigg'n way they can afford it in the long run.

swmnguy's picture

The "How much can you afford to pay monthly" story is the only way these "Title Loans" and other loan-sharking practices continue.  If you looked at the actual terms of the loans (and understood them) you'd never take them because there's almost no way that anyone who would consider them could succesfully pay them off.

The point is, of course, not to sell the item in question be it a house, a car, or what-have-you.  The point is to sell a loan.  The item in question becomes the McGuffin, like the falcon statuette in The Maltese Falcon, or the briiefcase in Pulp Fiction.  It's irrelevant beyond the way it advances the action in the real story.  So then you look closely at the loan they're trying to sell.  Why would they give it away?  Because they know they can re-sell it to somebody else at a profit, or they know you can't really afford it so they'll be able to collect something, repossess the item in question and re-sell it a number of times, or something similar.  There's a hook somewhere, because obviously you can't run a business on those terms.

The flip side to all of this is that if you are in the market to buy a house or a car, and you can get a loan at or below the real rate of inflation, you're best off to take that loan, and then make extra payments of principal.  That way your monthly payment is where you want it, you can pay less interest than the lender expects, and you have a buffer in case of a rough patch with a mandatory payment you already know you can pay.  In that case, you do well to pay more attention to the monthly payment than the nominal interest rate.  But that's only when you could afford to pay more, not when you're stretching to get a minimum payment you can barely afford because in reality you can't afford to buy at all, shouldn't, and wouldn't if you had any sense.

Midas's picture

I'm wondering if there isn't some other vig the Danish bank is after.  Possibly a closing fee of a few grand, or selling some other bullshit angle like insurance.  After all, these are banksters we are talking about.

7.62x54r's picture

The Banksters all get commissions on the loans. The stockholders ( pension and mutual funds ) all lose, of course.

These commissions fueled the housing bubble back in 2008.

7.62x54r's picture

They can't.

Offering NIRP mortgages is simply a way to avoid even higher NIRP on deposits at the central bank.

Banks cannot make money on paper, they have to borrow money ( for free! ) from the central bank to stay afloat. However, the bankers all make money hand over fist on the mortgage sales commissions, so it all good!

bluskyes's picture

Same here, but then Iam reminded of how thankful I am that my crotch isn't burning from std's

USGrant's picture

I am happy to have sold my STD at a good price.

Random_Robert's picture

She was probably the first one to score one of these "we'll pay you to take out a mortgage" contracts...


zhandax's picture

Something like that got me married once.

shovelhead's picture

Spokeswoman for The Danish Anorexia Foundation?

I got toothpicks that got more meat on em than those legs.

She'd be very pretty if someone fed her.

Bangin7GramRocks's picture

Nice work! I thought being smoking hot paid better. That cooz looks like she lives with Travis Bickle!

zhandax's picture

I am sure you would be happy to decorate her interior.

A Nanny Moose's picture

I would like a side of freedom fries with that shake.

Anasteus's picture

That's unbelievable!.. Das Uberfarce

7.62x54r's picture

Real life is beating The Onion for absurdity.

McMolotov's picture

From the ZH twitter feed:

"When you do an equity line of credit on a negative rate mortgage does the Stay Puft Marshmallow Man appear?"

Dr. Richard Head's picture

Why can't we cross the streams?

Because that would be bad.

I'm kinda fuzzy on this whole good bad thing.