Negative interest rates can result in ‘bizarre outcomes’ for savers and mortgage holders | Personal Finance | Finance


“Put another way, if your mortgage comes with a negative interest rate, you’ll end up paying back less than you borrowed.”

However, that doesn’t mean borrowers would receive payments into their bank account from their mortgage lender in the event interest rates turned negative.

“Where this happens, the bank doesn’t actually make monthly payments to the borrower,” Mr Zangana said.

“Instead, the bank reduces the outstanding capital, thereby accelerating how fast the borrowers reduce their debt.

“Clearly, where interest rates are negative, there is little incentive for the mortgage borrower to repay debt.”

Source link


Please enter your comment!
Please enter your name here