You are viewing a single comment's thread from:
RE: Denmark's 3rd Largest Bank Is Now Paying People To Take Out A Mortgage
Can anybody explain why banks would do this?
Posted using Partiko Android
Can anybody explain why banks would do this?
Posted using Partiko Android
Banks operate on cash flow.
If the national bonds are priced at -0.6%, banks simply need to prove future cash flow, ergo payment at x year. This allows them to yield the interest on the negative-interest national bonds. Easiest way to prove future cash flow is to create debt by punching in numbers into a screen for a big-ticket secure-value asset; homes are the go-to for this.
In the end, the government prints surplus money to cover the bank's profit. What profit? If the national bond is at -0.6% and the mortgate is -0.5%, the bank makes 0.1%. The more cash flow, ergo debt, it can create, the more money the bank makes.
Ok, that makes sense to me. Thanks for the answer!
Posted using Partiko Android