U.S. mortgage rates may be low, but they're likely even more attractive to homebuyers in Denmark.
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Danish 20-year fixed-rate mortgage loans just hit a new low: Zero.
For the first time ever, in Denmark’s $495 billion mortgage-backed covered bond market, Nordea Bank Abp said it will start offering 20-year fixed-rate loans that charge no interest, according to Bloomberg News.
“It’s never been cheaper to borrow,” Lise Nytoft Bergmann, chief analyst at Nordea’s home finance unit in Denmark, told Bloomberg. “We expect this to contribute to driving home prices higher.”
Bergman, however, did call the development “eerie” — saying it’s strange that investors are willing to lend money for 30 years in exchange for such a small (0.5 percent) return.
Mortgage rates in the U.S. also plunged to a multi-year low this week, amid growing — and persistent — fears about slowing global growth, after central banks in India, New Zealand Thailand and the Philippines cut interest rates more than expected.
According to Freddie Mac, on Thursday, the 30-year fixed-rate mortgage slipped to 3.6 percent, the lowest level since November 2016.
That came as the U.S. bond market flashed the highest alert for an economic downturn since the start of the financial recession when rates on 10-year notes sank to 1.73 percent. They yield curve has been inverted for close to 11 weeks, spurring fears of an impending recession.