In this report, I cover the early market action from London on Friday, June 7th, 2019. I look briefly at the precious metals, the stock market, the dollar, the bond market and the price of WTI and Brent crude oil.
Today I look at an article from Simon Black of Sovereign Man in which he writes about how Nordea Bank from Denmark offered to lend him a 10-year mortgage at minus 0.12%. It does seem puzzling to think that a bank would want to pay you to borrow from them but do not be fooled into thinking the bankers are being nice to you by doing this.
The way this works is that Nordea Bank will be paid a bit more to borrow from the Danish Central Bank so even though it seems like a great deal for you the borrower it is just as good a deal and if not a better one for Nordea. The other side of the coin is that you would be taking on debt in a period of deflating interest rates which means rising bond prices or loans.
My conclusion is that it is very tempting to be told by your local banker or mortgage broker that you will be paid monthly interest to take on a mortgage but do not forget that you will be taking on a debt load which becomes harder and harder to pay off in a period of deflationary interest rates and rising loan prices.
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