3 ms·
> Back in 2012, policy makers drove their main rate below zero to defend the krone’s peg to the euro. Since then, Danish homeowners have enjoyed continuous slid
by mywittyname 6y ago
> Back in 2012, policy makers drove their main rate below zero to defend the krone’s peg to the euro. Since then, Danish homeowners have enjoyed continuous slides in borrowing costs.
This is like a Canadian getting a 3.0% loan in USD to buy a house, then having the Canadian government fix the Canadian dollar such that it appreciate 3.0% pa against the USD. It's effectively a 0% loan, but due to obscure technicalities.
It seems, the lender still earns interest, it's just that the interest is covered by the variance in exchange rates between currencies. So your DKK1000 mortgage payment is worth €1030 after the first year, €1091 the next, etc.