Home loans at 0 per cent interest. Find out here! – DNA India

Something that would surprise people in other parts of the world, banks in Denmark are offering 20-year home loans to the Danish citizens at a fixed interest rate of zero. Denmark has the longest history of negative central bank rates in the world. It stands out globally for having continued with it for a longer period of time than any other country in the world.

The home-finance unit, Nordea Bank Abp can, is offering such mortgages for its customers. It is a lower coupon than even benchmark United States 10-year treasuries.

Since the country’s policy makers drove their rate below zero in 2012, the homeowners in the European country have benefitted from a continuing slide in rates for borrowing.

It seemed to be an unthinkable notion once that the customers can borrow for as long as 20 years without paying interest.

Many central bankers all over the world are currently staying away from hiking rates. Bloomberg, in its quarterly review of monetary policy, suggested that no major western central bank was going to raise rates in 2021.

With the rates continuing to sink, some other banks in Denmark are joining Nordea to provide this package.

Totalkredit, which is a unit of the largest mortgage lender in Denmark, Nykredit Realkredit A/S, said that it would provide its customers loans for 20 years at zero per cent. Denmark’s biggest bank, Danske Bank A/S, may also do the same.

Bloomberg Quint quoted chief housing economist at Nordea Kredit, Lisa Bergmann, as saying that the demand was there and that the bonds backing these mortgages were likely to reach a record high.

The mortgage lenders in Denmark had issued 20-year bonds at zero per cent coupons some years back, when the rates went down because of investors looking for a safe place for their money. It is the first time since then that these rates have come back in the lending market.

Source: dnaindia.com