Danish bank launches 20-year fixed 0% rate mortgages

Danish borrowers will be able to access 0 per cent fixed interest rate mortgages with 20 year timeframes as Scandinavian banks continue flirting with negative rates.

The Nordea Bank Abp’s move comes as central banks around the world take interest rates close to or below 0 per cent, Bloomberg reported.

Denmark’s official interest rate is negative 0.75 per cent, after the European nation took rates negative in 2012, the first country to do so.

Denmark’s central bank, the Danmarks Nationalbank, took interest rates negative in 2012 after pressure on foreign exchange markets.

Switzerland has the same rate while Japan’s central bank has a negative 0.10 per cent interest rate, and several European countries have 0 per cent interest rates.

Denmark’s Jyske Bank began offering borrowers minus 0.5 per cent 10-year home loan interest rates in August in 2019.

Under that loan, mortgagors make monthly payments but the amount remaining reduces every month by more than what the borrower paid.

Other Danish banks, including Nykredit Realkredit and Danske Bank A/S have also in recent days said they will offer, or are considering offering, 0 per cent interest rates, Bloomberg reported.

And according to the Nationalbank governor, Lars Rhode, interest rates aren’t about to increase any time soon.

“There’s nothing in the data to indicate that we’re facing a rate increase,” Lars Rohde, the governor of Denmark’s central bank, said in late December.

Rohde said the negative rates stimulate the Danish economy and boost the labor market, and that in itself “creates equality”.

Denmark has seen falls in unemployment since it took rates negative, with unemployment at 3 per cent before the pandemic and now at around 4 per cent.

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