Denmark, Belgium, And Netherlands: Negative Mortgage Rates!

Denmark, Belgium, And Netherlands: Negative Mortgage Rates!

In early 2015, after seeing a staggering $1.4 trillion in Euro area government debt trade at negative interest rates (the number has since grown to $6 trillion) we wondered when the bailout of insolvent governments was going to make its way to other debtors. Our question was quickly answered when we found that a negative rate mortgage had been issued by Nordea Credit, a bank in Denmark. Recently, even the WSJ finally stumbled on this bizarre inversion of traditional borrower obligations.

We noted at the time that this this was the first of many such paradoxes, as eventually more and more banks would begin to fall in line with ECB expectations and lend at slightly negative (at first, then progressively more negative) rates, rather than lose even more money as a result of leaving cash in the ECB deposit facility.

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.”

Earlier this month we got evidence of that when we learned that a bank had issued a negative interest rate on a mortgage in Belgium.

Now, courtesy of, we learn about another bank that is paying customers to take out a mortgage, this time in the Netherlands.

As a result of entering into a variable mortgage agreement that was denominated in Swiss Francs, and set at 0.7% above Swiss Libor, Achmea Bank now finds itself having to pay borrowers to take out a mortgage.

There is more to this story however.

It took a court case to force the bank to pay what it owed. As CHF Libor rates plummeted on the heels of the ECB’s NIRP policy, instead of paying the borrowers their contractual due, the bank tried to get away with simply telling the borrowers that they didn’t owe anything on their interest payment.

In a ruling announced on Monday, the Netherlands’ consumer financial products watchdog, Kifid, said it had sided with the unnamed holders of the variable interest rate mortgage, who brought the case, rather than with lender Achmea NV.


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