This page has been archived and commenting is disabled.
In Denmark You Are Now Paid To Take Out A Mortgage
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:
Who will offer the first negative rate mortgage
— zerohedge (@zerohedge) January 30, 2015
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 DR.dk, 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
- 79071 reads
- Printer-friendly version
- Send to friend
- advertisements -


(Sorry: wrong thread)
In Soviet Russia, mortgage pays you
Denmark too I guess
Ramming speed.
“the negative rate mortgage is now a reality.”
Don’t get excited. Banks know what they’re doing: they know that, when interest rates recoil from 7-8 years of artificial suppression, there will be an unprecedented slaughter in prices of major assets, real estate, stocks, bonds, cars et cetera.
Banks are using these negative mortgage rates, ZIRP and NIRP to sucker the population into major purchases at relatively high prices. Then, when the system breaks, those suckers will be sitting in a house with a mortgage 2-3 times the value of the house; and their credit will be shattered for the rest of their lives.
There is a better alternative.
+1000 I especially agree with this: DHS was specifically modeled after French committees of terror (1792-4), the Judeo-Bolshevik Cheka (aka NKVD, KGB et cetera) and the Nazi Schutzstaffel.
+1
Looking on Zillow and Trulia, its unbelievable what these people think their midcentury houses are worth. They replaced some wall outlets, a sink faucet, put in laminate flooring from a coupon at Costco, and painted a wall and they think their house that listed for $80,000 in 1995 is now magically worth $250,000 albeit being 20 years older and in worse shape. The neighborhood has more crime now, and its core is a strip mall whose heyday was pre-internet and is now only 30% occupied.
Negative mortgage rates still wouldn't fix the fact that the median wage earner makes $28,000 a year, and is still priced out of this decaying area. A housing correction is long overdue.
So what?
You've already skimmed off the rental income from the properties. Let the bank forclose.
Thanks.
Can I get the Spiderman tee shirt instead?
Am into assets rather than paper...
My favorite line in that article was this one:
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."
She has a bright future as a Centrral Banker.................
http://failblog.cheezburger.com/thereifixedit/tag/duct-tape
You may be getting 1% of your loan back, but you will pay in very expensive krones over the years.
Pay for what? Make it interest-only.
At the end of the term, you still have to repay the whole thing, in expensive krone. (and collapsed house prices)
i guess you would have to just pretend to buy the house.
NO. You only have to declare bankruptcy. And then laugh your ass off.
Unfortunately most people seem to forget the 'repayment' part of things. Heck, there's still a lot of traders who think lower interest rates cause currencies to depreciate in the long run. Oh how wrong they are!
How so? I thought the purpose of the neg. rates was to keep the currency weak.
Neg rates force the savers to take their money out of the banking system. Hence, loans become scarce, and scarcity pushes up the value of the currency and suppresses demand. Creating even more deflation. While higher rates do quite the opposite, push more money into circulation through the credit creation mechanism (the banks), increase velocity (as people race to put their money into the banks), etc.
Look at Japan/Switzerland/USA -- massive currency appreciation in the ZIRP environment. But look at all the banana republics out there with double-digit interest rates -- their currencies usually suffer massive depreciation.
Both extremities are great for gold, as they imply monetary instability, and malinvestment. In deflation, malinvestment is in 'paper' assets such as government bonds. In hyperinflation, malinvestment is in the hoarding of return-free commodities and inventory. As well as in plant/machinery in excess of legitimate demand.
Negative interest rates simply keeps housing asset (collateral) values up stopping the banks balance sheets imploding. Lesser of two evils, and allows the game to continue. Maintanence of the status quo is now the aim of the system, as TPTB continue to wring the last drops of blood from the turnip. A reset may see them lose their feudal ownership privileges & rights. Must keep the game going, even if the serfs appear to have a small win.
Wait, I thought the debasement of Accounting kept the real values of those houses off the books.
Even that will fail eventually, as overcapacity causes asset values to implode.
What a ridiculous move! Danes are already in over their head in mortgage debts I'm sure this sends out the wrong signale. Interestingly in Switzerland, despite even lower negative rates banks have not given negative interest on mortgages but some are close to zero!
Actual negative rates on retail loans are impossible as the lenders/savers will simply hoard the cash instead. Hence, in a NIRP environment, lending will actually fall.
This is where the crazy stuff starts. Like the central bank waking up and deciding that all of the 'old' currency bills will be only worth a fraction of what the new ones are worth, etc. A profoundly good time to be sitting in gold, that's for sure.
So, instead of needing to lend my savings, and charge interest to make a profit - I can borrow, and the principle will shrink over the term of the mortgage - without making a payment?
Sign me up for a trillion dollars worth!
Brilliant but you shouldn't have said anything. Now everyone will be lining up.
They already are. I expect zillow to be devoid of Denmark properties in a few days.
You'll have to repay your loan in appreciated currency, which will probably be extremely difficult unless you invest in something very, very creditworthy.
Wrong.
You pocket the rental income outside the country. When the correction comes you let the banks forclose. You didn't put any money in anyway, so who cares?
Arbitrage opportunity:
Hold off on amortizing your -0.03% Danish mortgage and redirect the capital repayments to a savings account in Vestjysk bank at 1.25% variable or Ikano bank at 1.45% fixed for 3 years.
We are reaching a crescendo in terms of stupidity and this will make way for some absolutely even more insane solutions. Take cover and cradle your gold.
Put a Porsche on top of that (not some stinking Spiderman towel) a hooker and let the Banker shine my shoes and you have a deal.
Obamahomes! Make it happen Barry.
I cannot find the exact quote, but Griffin in "Creature from Jekyll Island' says that the banksters' creation of money via debt creates the need to manufacture even more debt in the next cycle. And so on...
It's a negative reinforcing cycle.
Looks like "game over" is near if they are having to pay people to borrow their fiat. Also reveals that the debt they foist on people is not the goal, but to take possession of the underlying collateral when things go poof.
LOL
The banksters need to repay us.
The guillotines await.
I love your posts. They are usually the highlight of the thread.
The banksters need to repay us. Indeed!
https://www.youtube.com/watch?v=Pjh1ryvBZBo
The banksters need to repay us.
Gold, silver, and/or heads gladly accepted.
Welcome to Tara you darn debt slaves.
Best part starts at 2:10.
http://www.youtube.com/watch?v=YSOYTFw0JaA
im waiting for a negative oil price -
Seems stupid.....except maybe to assclowns like Krugman.
Nothing wrong here. Socialism at its finest!
A negative interest rate in currency likely to appreciate really isn't a good deal for the borrower. Besides, most assets are severely inflated by the presence of "cheap" money. Hence, the deflationary trap the economy is in. As in the last Great Depression, the only meaningful way to protect oneself is through exposure to deeply countercyclical investments, ie: the precious metals and their producers.
I see nothing wrong with self extinguishing mortgages. Will be helpfull in deflationary times.
Can any of you mortgage bankers out there explain how to calculate a negative amortization loan with a NIR ?
So, no usury worries there at least................
they have actually invented something new under the sun.
it really is an accomplishment.
the idea of usury is as old a mankind.
usury being charging incredible rates to lend you money.
NOW - they charge YOU for lending them the money.
has anybody thought of anything more brilliant.
if you really think about it, they are saying - 'hey - you let us play with your money, we guarantee you will only loss a small percent. otherwise - invest in anything else - and you are taking BIG chances'.
brilliant!! lloyd and jamie are brilliant and draghi is their pupil.
Homeowners in Denmark are not - yet - getting paid to take out a mortgage. The kind of mortgage where the interest rate has just gone below zero is a variable interest rate loan with yearly rate adjustments, financed by one year bonds. A yearly administration fee of (if memory serves me right) 0.65 percent has to be paid too, and I would guess people having these mortgages are still paying over 0.6 percent per year.
Another interesting development in Denmark today, which I have not seen reported outside Denmark, is that the government has temporarily stopped issuing new bonds. This has been done on the request of the Danish central bank, in an attempt to limit capital inflows and make it easier to defend the peg to the Euro.
Well why do I even have to make any payment whatsoever on my mortgage. Why doesn't the Central bank just print it for me? What is wrong with me? I didn't do nuthin' wrong.
Can they pay off their student loans with it?
Student loans? This is Denmark not the US you're talking about students get paid to study and not the other way round. :)
DP...
Oh yeh ... and a 'nother thing... If I am getting paid to take out a mortgage are those $$ taxable or deductible?
Don't fucking call us, we don't understand as well.
http://www.irs.gov/Tax-Professionals/e-File-Providers-&-Partners/Modernized-e-File-MeF-Status-Page
Use 3rd party software, so we can easily audit you by us refusing to take all 2014 tax question calls. TurboTimmy is a good brand. Tell us you voted Obama, received a 10% discount voucher on tax filing.
:P
Fuck you Government maggots, within hours we can turn tables. You will be exposed on every god damn secret within your life. How does it feel to lose your job? Do you still feel powerful and above the law? Don't forget that you are a taxpayer peasant and you work for us.
Without new budget approvals, you don't receive a salary increase. Without a salary increase, you backdoor traffic tickets to offset performance incentives. When the taxpayer closes the front door, city officals threaten to increase city tax and property tax.
That's when you move and never spend a dime in that city again. Hello Cleveland, OH & Medina County, OH. FUCK YOU! Glance at each other during the next board committee table meeting. Keep raising the cost to cover Government pensions and chase people out. Everytime the population declines, tax increases follows. Why did the population decline? Next board committee question.
I'm very fat and sassy in SC/FL. Three more houses to sell in Ohio, shove that Ohio Obamaphone up your ass. What new nigger idol candidate will you feature in the future, during 2016 elections? Thank god my homes are in Medina, not Cuyahoga.
it is very logical
when real estate is overpriced it is possible to offer a discount - mortage with negative interest rate
When normal house values reappear the mortgage will be in negative equity. And this is very logical?
Bet they are selling a 90 day same as cash futon mattress mortgage offer. After 120 days, interest hits 15% on mortgage repayment plan.
/LOL
NIRP works in strange ways.
Ok, I'm finally converted. The whole system is stark raving bonkers mad.
When the market crashes.....
This just forces the banks at some point to buy gold because that will increase the price of it and force investors to chase it - thus taking money away from the bonds so they can charge higher rates....
Imagine forcing investors into Gold and Silver because it is the only asset going up.....
This is the reverse of the current scenario of the price of PM's going down as the volume of buying goes up.....
"Imagine forcing investors into Gold and Silver because it is the only asset going up....."
Or, in deflation, falling the least. It will eventually go up, when they run out of stored gold to sell into demand. (Considering Germany and Netherlands recently repatriated some, we may not be there, yet.) Then, it'll be worth more than a neg. interest rate bond.
Buying a house priced 100% over real value with a nirp loan is not winning.
Just my humble opinion.
How will Loan to Value [LTV} banking formulations work with NIRP? Bassel III is on the case? Winks.
The stupid fucks are out of control. Above mentioned, wait until they hear gun shots. Don't hurt me, I have money in my safe.
Once they hear, we're not here for your money. They'll know to pyramind system is done. Some will be executed, others may survive.
Not a joke.
Correct.
Buying a house priced 10000000% over real value is winning! Especially with no down payment. You pocket the NIRP income on the huge loan, and let the bank forclose on the shack once the world comes back to its senses.
Is there a property tax in Denmark?
Kewl! And if you default, the bank sends you a principal payment every month?
' I gave my love a cherry '
'that had no stone '
' i gave my love a chicken '
' that had no bone . . .'
Animal HOUSE - John Belushi
Said the teller to owner of his treasured savings account......."Annnnnd.......its gone."
Now to really get into the Central bank swing of things would be to take out a negative mortgage in Denmark but do it in Swiss Francs !
Mora (Momma) didn't raise no fool !
Helicopter mortgages bitchez!
What are the derivatives on these gonna' look like??
My bank is paying squatters to move in.
Imagine the municipal bond potential and largesse with the state offering negative rate mortgages O wait we do that with ZIRP and 5% inflation, all those new homeowners need daycare centers and schools and,,,,,,,
I am coming to the realization that I have misunderstood the new paradigm of banking, central bank finance, and fiat currencies. As QE to Infinity (QEtoI) and Modern Monetary Theory (Print Forever) evolve, interest rates go negative as a logical necessity to cope with ballooning national debt. (Its easy to understand once you give up on the silly idea of national debts ever being paid off) As negative interest rates are instituted to protect against being crushed by gargantuan and growing national debts, negative interest rates will naturally take over in personal finance as well.
So, when you deposit money in the bank, the bank will not pay you, rather you will pay the bank a monthly fee equal to a percentage of the money on deposit. Similarly, if you borrow money from the bank, the bank will pay you a monthly fee as the NIRP.
BUT, wait for it, wait for it..... The next step in the QEtoI/MMT program is not only NIRP, but Negative Monthly Principal Payments (NMPP) along with NIRP. Under NMPP/NIRP, you will not only receive a monthly interest payment, but the bank will make a payment against the principal owing each month. Just be sure to choose large enough monthly payments and a mortgage term at least as long as the amortization period, so that at the end of the term, the mortgage has been paid off by the bank. Buy your new mansion, and sit back and enjoy life while the bank pays it off. If you borrow enough, the NIRP paid to you will cover taxes, insurance, utilities, landscaping, and maintenance, and provide a good standard of living for you as well. Quit your job (if you had one) and retire in luxury.
The third and inexorably logical step in QEtoI/NIRP/NMPP in personal finance is NIRP/NMPP CREDIT CARDS. The more you spend, the more you save! (Where have I heard that before. Can't remember, but don't worry, its all good).
The fourth step in the new financial reality is Negative Income Tax, soon to come to you from your friendly Internal Revenue Service Office. The more you earn, the more the IRS will add to your income. This will be a great incentive to push people to work more and earn more.
I now realize that when Janet Yellen talks about raising interest rates, she is telling us that we can expect greater returns upon the money be borrow. Good on her!
Now that I have come to grasp these fundamentals of QEtoI/NIRP/NMPP personal finance, I can grasp the awesome wisdom of our political leaders and their chums at the Federal Reserve and in Wall Street. I thought that increasing national debt was a problem that would enslave taxpayers, when the truth is that QEtoI/NIRP/NMPP is the key to personal wealth and freedom.
The only disappointment I feel now is that some people will not grasp the wisdom of QEtoI/NIRP/NMPP and will criticize our political leaders and bankers, saying that there is something wrong with the program. Ah, well, you just can't please everyone, no matter how much you try.
This will lead to Step 5: Negative Gold (NG) Banks and business will pay individuals to haul their gold away.
The best part about this is that we will not need to invest in fancy vaults or other safeguards. Just pile it on the front lawn, and wait for some old-fashioned idiot to steal it so that you can get more.
There will be nice synergy with Negative Oil (NO). Get paid to fill up the tank, then get paid to haul gold away.
Bullish pickup trucks.
And then, there is always Step 6: The Roentgen Standard...(or radioactive money)
http://www.larryniven.net/stories/roentgen.shtml
The two best lines:
Gold would still be the mark of wealth. Gold blocks radiation as easily as lead. It would be used to shield the wealthy from their money.
-and-
Foreign aid could be delivered by ICBM.
Tough to get ones head around the concept of "un-money". Think i'll stick to pm's.
Right on. PMs or any real asset will skyrocket from the fiat flood. Your ability to borrow will be determined by the mark-to-fantasy of your hard assets so the bigger your McMansion the more you can borrow in the future.
Goldman Sachs is already making a killing in the arbitrage: Borrowing at -0.003% in Denmark and investing in a Swiss -0.010%..........
Goldmam Sachs is investing on OTC/ penny market trades.
It won't be long before the Danish hookers are paying you to utilize them.
It's a joke, but no joke at all. This is what happens when all governments and virtually all regular folks are borrowed up beyond their nostrils! By the time they make the monthly payments on their debt, they have about 3 cents per month to spend on everything else.
With almost nobody remaining with free cash to buy anything the lower demand does have a negative influence on prices. No way around that.
Which makes the deflationary forces even stronger than inflationary forces, even as the predators-that-be print fiat money like crazy, which they are.
Which is why fiat [stock] markets soar, while markets for real stuff languish. The rich folks who get all the newly printed money can't jam another gram of kosher into their faces at mealtime, so they spend all that newly printed fiat on... other kinds of fiat (like stocks).
They keep looking for ways to get regular folks to get deeper into debt to feed their crazy cash-flow machines. But with everyone maxed out on debt, they now have no place to lend to besides... government (which is now completely unreliable junk-debt), and, and, and... well, maybe with negative interest loans regular folks will borrow more?
Maybe so, but this can't last long, that's for sure!
I smell a huge sale on real goods in the near future... for those few folks who avoided debt and piled up those savings. Well, except those who have their savings in banks, because most of those savings will vanish in 2015.
The world economy has its own rope wrapped around its own throat so tightly now, dead is the only possible result.
well... you summed it up totally... we are so fucked...there is no going back...the edge of the cliff is getting quite close now... it is in sight...
Keep in mind it's a 'variable' interest rate, negitve or not and when currency's revert to the mean as a result of the shifting devaluations, interest rates will trend higher much faster.
The system is punishing those who wants to save meanwhile rewards those who stick into more toxic debt. They're practically forcing the sheeps to go deeper into the slaughterhouse.
No 'practically' about it! NIRP is like an anesthetic. They're intent on owning EVERYTHING thru Debt Slavery.
Awesome! I want one! I can't wait until they come to America!
Are the mortgages denominated in Swiss Franc?
Keeping cash in the bank lose money from the bank due to inflation. Buy a house they give you money. WTF
In france its diificult to kick people form their home even if they cant pay back their loans. And if they change the law it would be 1789 again.
So the biggest combo would be loan nirp max amount + physical gold / silver.
When the system crash, you can pay back your worthless paper mortage with some coins. And be happy in your new big house.
Can anyone advise how a non finance industry connected individual from here in Australia can get access to a European or US loan ? (Prefer Euro to minimze currency depreciation risk) Even at 2% it is 1/3 what we pay here ... and ours are variable so if inflation kicks in the CB rams it up (went to 18% last time) and buries everyone.
I'll take the equivalent of $450K AUD @ 2% with a first and only mortgage on a $900K property if anyone can arrange it.
1) Get mortgage
2) Default on mortgage
3) Pocket the negative interest
4) Repeat
Buy mortgages on margin, sell back to yourself in a Dark Pool.
Securitize criminal mortgages and sell it to the people as AAA-grade "mortgage backed securities".
PERFECT! Now I can afford to buy that surplus dry ship and convert it into a floating bunker/bugout location!
These jokers in Denmark should stick with what they know... fishing and effective coastal defenses.
Don't worry they'll just deduct "a fee" from your myira to cover it.
How is this not deflationary?
Putin regime goon attacking Ukranian city and its residents. This is their "liberation":
http://youtu.be/XWSn4xCFcf4
Here you go ... a photo of your hero:
http://pistolero.aracari.swift-mail.com/Images/viedoklis_lv-hero.jpg
When money comes literally from trees and ink, when money comes from digital 1's and 0's on a spinning platter - any absurdity is possible and not only possible but probable....It's as simple as that...
There is no way I can Fucking belIeve thAT!!!
The laws of finance have not only fallen over, but they are standing on their head! So when 30 year mortgage rates drop to -5%, you will be able to live in a $2 million home, and get a check back from the bank each month for over $10k!
Give up on the idea that central banks are independant of governmnets. Consider a simple case a hundred dollar loan at zero percent interest for five years payable as a lump sum at five years. The commercial bank borrows the money for nothing from the central bank who conjures it for nothing and as a result the commercial bank now has a liability of 100 dollars and an asset of a one hundred dollar debt mortgage instrument. The central bank/government now has an income stream from taxes levied and the commercil bank now has a bet on interest rates declining further so that the debt instrument becomes more valuable. Having a negative interest rate changes nothing of the above.
In Denmark, bank pays you.
Hyper-deflation in 3..2..1... bitchez!!!
I speak Danish so can give some more insight on this. There are parallel articles in the Danish press which illustrate the increase in fees for Danish mortage bonds. In Denmark the "Realkreditinstitut" brokers a bond on your house, which is sold in the market and the price of your loan is dependent on market conditions if you want to buy it back. Anyway there are fees of about 0.7% on an 80% loan. Also the bond prices are currently slightly below 100 so you lose 2% at origination if the price is 98. Also for a short duration loan (as little as 6 months) then you pay 0.2-0.3% every time the bonds are reissued. So all these fees add up and it is unlikely that anyone will be paid to a loan.
Here are the prices from Realkredit Danmark (owned by Danske Bank):
https://www.rd.dk/da-dk/privat/koeb-bolig/Kurser-og-renter/Pages/Aktuell...
The most aggressive loan is Flex Kort u.adr. (u.adr. means no amortization i.e. interest only). Here the price 99.62, 0% interest. So you pay 0.38% at origination plus probably another ~0.2% fee for the sale of the bonds. Then the other major fee is called bidragssats, which is a function of size of your loan as % of valuation (up to 80% for these bonds; there are other "secondary" loans that are much higher interest and shorter just like in the US especially during the bubble).
Anyway, the cost to borrow 1 million DKK interest under the column "1. års ydelse før skat" is DKK 14,443 and the effective interest rate before tax is 1.36% despite the 0% coupon. So if you buy a DKK 6 million house and put down 1.2 million (very few Danes have that kind of cash) then you can get a decent house in one of the top suburbs north of city for a "fee" of only DKK 69,000 per year or slightly more than USD 10,000 per year. Not too bad.
Well it is true that the Investor is having a negative yield, but Danish mortgage borrower has also to pay a margin (lending spread), between 0.45% and 1.52% depending on their LTV.
So no borrower is getting paid to borrow money!
https://translate.google.dk/translate?sl=da&tl=en&u=http%3A//rd.dk/PDF/P...
Mizuho Bank is now offering a cash bonus to customers who buy JGBs. 3,000 yen for a 5 million bond.