Real Estate

Negative mortgage interest rates

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  • May 28th, 2019 11:26 am
[OP]
Newbie
Nov 20, 2017
72 posts
37 upvotes

Negative mortgage interest rates

Negative mortgage interest rates have been appearing in Japan and the EU. Denmark was the first to have it, since 2012. What does it mean when the interest rate is negative? The bank pays you the negative interest! Over/under on seeing these in Canada within 10 years?

https://www.bloomberg.com/news/articles ... -mortgages
14 replies
Deal Expert
Feb 29, 2008
18707 posts
16925 upvotes
Tarrana & The Ri…
I'm just gonna pull up a seat and sit right here in the corner.

*waits patiently*
Deal Addict
User avatar
Dec 16, 2015
3636 posts
3341 upvotes
Toronto
JayLove06 wrote: I'm just gonna pull up a seat and sit right here in the corner.

*waits patiently*
Dont be shy, the bank gives free cookies for every mortgage payments
To the moon
Penalty Box
Aug 11, 2005
4175 posts
1430 upvotes
Real estate too da mooon.
Political avatars and signature are not permitted.
Jr. Member
Jan 31, 2013
124 posts
106 upvotes
Toronto
Denmark: where money grows on trees.
Deal Addict
May 12, 2014
3290 posts
3272 upvotes
Montreal
Forget negative rates, for me the sweet spot would be "households in the country paying as little as 1% to borrow for 30 years.".

No way inflation stays that low that long.
Deal Fanatic
User avatar
Sep 8, 2007
9248 posts
10815 upvotes
Way Out of GTA
This is the problem both perpetual stock market and RE bears don’t understand.... central banks changed from inflation fighters to asset pumpers. If there’s even a blip in asset prices....tightening policy turns overnight into neutral then into cuts...then into QE type actions.

I think this is wrong but that said...who am I? The tsunami of rising asset prices is like Niagara thru a garden hose.

So the windows for making money is narrow on the bear side. Even 10 years ago. The stock market hit a hit in summer 2008 and ultimately bottomed March 2009. For sure it’s short sharp shock. But the people that made real cash were those that bought, and keep buying on the way down. And by 2010 were well up.....yet the central banks kept doing all sorts of wild stuff to keep pumping. Hence a 10 year tripling of your money and then some in stock markets and also big returns in RE.

Also witness the 2017 summer lull in GTA RE once the summer was over, prices stabilized even u dear a stress test environment and condos went limit up price wise this time. Dec’s stock market slump? Recovered with 3 months...

So on the bear side to me feels like standing in front of a train with a Zerohedge (stocks) or Garth Turner/Toronto Star (RE) shirt saying “but I’ll be right soon”.
Deal Addict
Nov 13, 2013
3524 posts
2132 upvotes
Ottawa
Well Canadian Variable mortgages are based on each banks prime rate not the BoC Prime rate which is the case in many European countries. As TD showed they can make their prime rate whatever they want to. Obviously they wouldn't let it go low enough to have mortgages with a negative rate. I think the European rate is currently -.25% but new mortages have a clause that if it is negative it is treated like zero. So a common mortage now is prime +2.5% which would make the current rate 2.5% rather than 2.25%.
Deal Expert
Feb 29, 2008
18707 posts
16925 upvotes
Tarrana & The Ri…
Bears have avoided this thread like the plague. Wonder why? :rolleyes:
Deal Addict
Jul 21, 2008
1536 posts
1728 upvotes
GTA
JayLove06 wrote: Bears have avoided this thread like the plague. Wonder why? :rolleyes:
Because they can’t reach the fruit anymore.
Deal Addict
User avatar
Dec 16, 2015
3636 posts
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Toronto
JayLove06 wrote: Bears have avoided this thread like the plague. Wonder why? :rolleyes:
Image
To the moon
Deal Addict
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Jul 8, 2010
1430 posts
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Ontario
JayLove06 wrote: Bears have avoided this thread like the plague. Wonder why? :rolleyes:
Probably because it is a stupid topic dropped here without even looking and understanding details on what is happening in EU market.... If your expectation as end user is to get negative rates on your mortgage, wish you good luck.
Sr. Member
Feb 21, 2010
886 posts
262 upvotes
Scarborough
EU countries updated their mortgage contracts so they don’t have to pay out interest money ever. Only handful of people ended up getting few dollars, rest all contracts were modified in time.

Expect the same here if there already a clause does not exist about bank not paying us interest to borrow

In this lifetime banks are not going to pay us.

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