I would be wary about negative interest rates on mortgages. Denmark might be giving you money at this stage when you borrow for a mortgage (see blue chart below of Danish mortgage rates). But there is a catch.
It seems too good to be true to borrow money and get paid for it by the bank, but consider this.
The thing is, when you borrow money and buy a house with it, the house price can collapse and the krone can strengthen through deflation. You might not need to repay the same amount back to your bank, but the money you repay is much more valuable later on in a deflationary environment. You could buy two houses with the same money when we enter a deflationary housing bust.
Housing in Denmark hasn't been doing so well lately.
Or the krone could strengthen against the euro and you (as a Danish person) will have to repay the loan in expensive krone.
I think that negative mortgage rates are a very strong indicator that we are going to see a major housing bubble pop soon. Once interest rates move up, everything collapses. And you will be sitting there repaying your debt.
It seems too good to be true to borrow money and get paid for it by the bank, but consider this.
The thing is, when you borrow money and buy a house with it, the house price can collapse and the krone can strengthen through deflation. You might not need to repay the same amount back to your bank, but the money you repay is much more valuable later on in a deflationary environment. You could buy two houses with the same money when we enter a deflationary housing bust.
Housing in Denmark hasn't been doing so well lately.
I think that negative mortgage rates are a very strong indicator that we are going to see a major housing bubble pop soon. Once interest rates move up, everything collapses. And you will be sitting there repaying your debt.
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