Denmark began issuing a mortgage for 20 years at 0%

Mortgage rates in Denmark dropped to historic lows. For the first time in the country's history, a local bank offered a mortgage for 20 years at 0%. Another lender set a negative rate for 10-year loans - agreed to pay borrowers instead of taking interest from them.
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Nordea Bank Abp in Denmark declared that it would offer a 20-year mortgage loan with a zero fixed rate. In accordance with the bank representatives, this is the first such phenomenon in the banking history of the country.
Before this, in early August, Denmark's largest mortgage lender Realkredit Danmark announced that it would launch a mortgage for 30 years at a rate of 0.5% annually. Moreover, this week, Jyske Bank, the top three banks in Denmark, announced that it would soon begin issuing a 10-year mortgage with a negative rate of -0.5% per annum. That is, the borrower will receive money from the bank instead of paying interest on the taken mortgage loan. The lending rate of the Central Bank of Denmark is 0.05%, it hasn't changed since January 2015.
"We have the lowest mortgage rates in the entire history of Denmark. This is a historic minimum," said Christine Hiligsoy Heinig, Realkredit Danmark chief economist, to The Copenhagen Post.
"This is a new chapter in the history of mortgages. A few months ago, we would say that this is impossible, but the situation again and again surprises," stated Jyske Bank economist Mikkel Heg.
Denmark is the country with the world's largest mortgage bond market. These securities are considered one of the most reliable - even during the Napoleonic wars, when the kingdom defaulted on its obligations, the mortgage bond market kept on working without serious disruptions. The interest rate on a mortgage loan is nominally equal to the coupon that investors receive.
Senior Analyst Danish Nordea Lise Nyutoft Bergmann commented, that low and negative rates indicate investors' concerns about the situation in financial markets. She also added that they expect much time to pass before the situation improves.
Current rates reflect the global economy. The main explanation is the uncertainty associated with the growth of the global economy, and also the ambiguity associated with the escalation of the US-China trade war.
In a long-term perspective, there is a threat that low-interest rates will lead to a boil over of the housing sector of the market. The flip side of the situation is that banks do not pay interest on most deposits. The interest rate of the Central Bank on deposits is -0.65%. According to the Danish Central Bank, the country's population holds 921 billion kroons ($ 139 billion) on deposits in banks, with almost 55% of this money being on deposits with a zero rate.
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