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Amateurs. Switzerland has a 50 year bond that was trading as low as -0.5%. Imagine that, paying CHF128 to get CHF100 sometime in 2070. This comes with a whole

Amateurs. Switzerland has a 50 year bond that was trading as low as -0.5%. Imagine that, paying CHF128 to get CHF100 sometime in 2070. This comes with a whole new approach to finance, such as infinite duration mortgages (you never pay them back). And they even have those with a floating interest rate, in case you would like to bet your entire net worth on the idea that rates will stay this low till you die (and till your children, who will inherit the house with the mortgage, die, and till their children ...). Brave new world.

belter 5y ago
You want more fun? Here is the Portuguese Central Bank, some time ago, mandating all banks to apply negative rates to their mortgages within 10 days, in case the corresponding Euribor happens to be negative. (link in Portuguese) https://www.bportugal.pt/comunicado/instituicoes-obrigadas-refletir-taxas-de-juro-negativas-no-credito-habitacao https://www.bportugal.pt/comunicado/instituicoes-obrigadas-r...
- the-dude 5y ago
  These mortages have been available in NL and DK as well ( I had one in NL ). My mortage did not pay me yet, but the negative rate was eating into the markup ( ~1% ). So for years I had a mortage with about 0.5% interest. I know of DK people actually got money out of their mortage.
DasIch 5y ago
In Switzerland you pay tax on the rent you could in theory receive as a landlord minus maintenance cost and mortgage payments. I suspect that this is a far bigger contributor to infinite duration mortgages than the bond market.
- ComputerGuru 5y ago
  I upvoted you for adding context, but I have a question: minus mortgage payments or minus the interest on mortgage payments? There’s a huge difference.
  - llampx 5y ago
    In an eternal mortgage you are only paying interest, so interest on the mortgage I believe.
- H8crilA 5y ago
  Ah yes, save a bit on taxes to get the most dangerous form of financing ever available to the general public, leverage up to your eyeballs. A classic, if something goes wrong the government will help us, right? :). And it's not like an ordinary person would a) really understand what such a mortgage is, b) be able to afford the property without using it.
- softveda 5y ago
  In Australia for investment properties you can subtract the interest and all cost related to property management from your ordinary salary/wages/rental income
w4llstr33t 5y ago
I think it is notable that Switzerland also has very favorable capital gains laws though, at least for private investors. Could hold stocks, gold / silver or crypto in Switzerland and not pay tax on gains as long as you hold them for 6 months or more, and didn't make more than 50% of your income from capital gains. [1] [1] https://thepoorswiss.com/capital-gains-switzerland/ https://thepoorswiss.com/capital-gains-switzerland/ (mainly talks about stocks but applies to capital gains in general).
- nickpp 5y ago
  It’s also notable that Swiss cantons impose various levels of global wealth tax. Fairly small I believe, around .5% mostly.
  - orthros 5y ago
    That sounds small but over 40 years that would net a portfolio about a quarter smaller than in a country without one.

belter 5y ago

You want more fun? Here is the Portuguese Central Bank, some time ago, mandating all banks to apply negative rates to their mortgages within 10 days, in case the corresponding Euribor happens to be negative. (link in Portuguese) https://www.bportugal.pt/comunicado/instituicoes-obrigadas-refletir-taxas-de-juro-negativas-no-credito-habitacao https://www.bportugal.pt/comunicado/instituicoes-obrigadas-r...

the-dude 5y ago
These mortages have been available in NL and DK as well ( I had one in NL ). My mortage did not pay me yet, but the negative rate was eating into the markup ( ~1% ). So for years I had a mortage with about 0.5% interest. I know of DK people actually got money out of their mortage.

DasIch 5y ago

In Switzerland you pay tax on the rent you could in theory receive as a landlord minus maintenance cost and mortgage payments. I suspect that this is a far bigger contributor to infinite duration mortgages than the bond market.

ComputerGuru 5y ago
I upvoted you for adding context, but I have a question: minus mortgage payments or minus the interest on mortgage payments? There’s a huge difference.
- llampx 5y ago
  In an eternal mortgage you are only paying interest, so interest on the mortgage I believe.
H8crilA 5y ago
Ah yes, save a bit on taxes to get the most dangerous form of financing ever available to the general public, leverage up to your eyeballs. A classic, if something goes wrong the government will help us, right? :). And it's not like an ordinary person would a) really understand what such a mortgage is, b) be able to afford the property without using it.
softveda 5y ago
In Australia for investment properties you can subtract the interest and all cost related to property management from your ordinary salary/wages/rental income

w4llstr33t 5y ago

I think it is notable that Switzerland also has very favorable capital gains laws though, at least for private investors. Could hold stocks, gold / silver or crypto in Switzerland and not pay tax on gains as long as you hold them for 6 months or more, and didn't make more than 50% of your income from capital gains. [1] [1] https://thepoorswiss.com/capital-gains-switzerland/ https://thepoorswiss.com/capital-gains-switzerland/ (mainly talks about stocks but applies to capital gains in general).

nickpp 5y ago
It’s also notable that Swiss cantons impose various levels of global wealth tax. Fairly small I believe, around .5% mostly.
- orthros 5y ago
  That sounds small but over 40 years that would net a portfolio about a quarter smaller than in a country without one.