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When interest rates are as low as they have been now for a long while (sub 2% for homes), the interest rate portion isn’t the limiting factor for how much you c

When interest rates are as low as they have been now for a long while (sub 2% for homes), the interest rate portion isn’t the limiting factor for how much you can afford to borrow. Instead, to prevent prices going to infinity, there is usually some kind of laws in place for maximum length such as 30, 50 or 100 years (infinite I.e interest-only was common at least in Sweden when rates were higher), a minimum down payment such as 15%, a maximum size of the mortgage relative to the income etc. Sweden now has all of these (!) so for most buyers, whether the interest is 0.5 or 3.5 makes very little difference. Most buyers, especially first time buyers, will be capped by one of the other limits regardless. As it has been pointed out, this loan isn’t 0% since it’s not the effective interest rate including fees that is 0%.

adventured 6y ago
This effect has also resulted in the people of Denmark becoming the most indebted households on the planet [1], which is increasingly a common theme among such low rate borrowing nations. Norway and the Netherlands are two of the other most indebted household nations. So the real cost is far beyond the low interest monthly payments, it ends up becoming a society-level risk of economic debt suffocation as people load themselves with ever greater amounts of housing obligation, and it sets the stage for a hyper regressive society where housing is far too expensive and you have to bury yourself in debt to buy in. 0% mortgages are cheered, while the staggering monthly payments caused by the asset-inflationary nature of those 0% rates is ignored (resulting in eg Denmark becoming buried in household debt their incomes barely support). [1] https://i.imgur.com/m5E6Tvd.png https://i.imgur.com/m5E6Tvd.png