Jyske Bank, the third largest bank in Denmark, was the first in the world to introduce a negative interest rate on mortgage loans. The bank will provide 10-year loans at -0.5%. Also, Jyske Bank will be the first bank in Denmark to introduce negative interest rates on deposits.
As the bank itself explains, a negative rate implies that borrowers will pay for taking a loan. Clients will deposit money every month; however, their debts will be paid off in an amount greater than they contributed.
A negative deposit rate will be provided on deposits of more than 1.1 million US dollars. From December 1, the interest rate on such deposits will be equal to -0.6%.
As early as in 2012, Danmarks Nationalbank set the base rate at -0.65%. Jyske Bank believes that if it can raise funds at a negative rate, then its clients should also get this opportunity.
Representatives of another Danish bank, Nordea, said they would soon prepare a loan offer for 20 years with a zero per cent rate. Nordea will provide mortgages for 30 years at a rate of 0.5%.
Recently, The Union Bank of Switzerland (UBS) has announced that they will set the rate of 0.6% for deposits of half a million euros. In addition, the bank plans to introduce a negative deposit rate for clients with the large deposits.
The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group