Finance

Danish bank introduces negative rate home loan: Report

Updated : August 15, 2019 07:42 PM IST

A major Danish bank will offer home loans to borrowers at a -0.5 percent interest rate, reported The Guardian.

Borrowers will have to make a monthly repayment like before but the outstanding amount will be reduced each month by more than the borrower has paid, said Jyske Bank, the third-largest bank in Denmark.

“We don’t give you money directly in your hand, but every month your debt is reduced by more than the amount you pay,” said Jyske’s housing economist, Mikkel Høegh.

Another Danish bank, Nordea Bank Abp is also offering 20-year fixed-rate mortgages with 0 percent interest.

The Bank of England’s base rate is 0.75 percent, and the European Central Bank’s main rate is zero, in Denmark (which is not in the eurozone) the equivalent rate is -0.4 percent.

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