Negative interest rates

Rizzo1987

Hi all,

I've just fixed for 10 years, I am wondering, if the crazy world of negative interest rates ever did hit the UK, could I take out a second mortgage and use it to pay my normal mortgage?

Confused. All theoretical of course! But who knows

pramsay13

Yes no problem, why not take out 10 mortgages on the same property?

MeenaM

Im not sure you would get a second mortgage merely to pay off the first but you could remortgage , if you did check there are no penalties for coming out of the fixed term early

what interest rate have you currently got?

I do not think mortgage rates can ever be "negative "

minimike2

Banks are not in the business of lending money at a negative interest rate. You are confusing two very different things.

Thrugelmir

minimike2 wrote: »

Banks are not in the business of lending money at a negative interest rate.

A Danish bank is currently offering such a product.

amnblog

Danish base rate is -0.4% and I believe this product pays back 0.5% pa (-0.5%).

There are charges that make the product profitable for the Lender however.

I imagine funds available on that basis will lead to swiftly rising property prices.

getmore4less

Some lenders had lifetime base - x% trackers when rates were higher.
They came unstuck when rates dropped to 0.25%.

Some had collars to stop the rate dropping to zero.

buglawton

I did hear a 1st hand story that when BoE dropped base rate to lowest ever in last 50 years after the '08 crash, a friend of a friend was receiving a monthly payment into their account for their base rate linked mortgage.

davidmcn

getmore4less wrote: »

Some had colors to stop the rate dropping to zero.

"Collars", probably?

I've certainly seen index-tracking facility agreements where the definitions make clear that the interest never becomes a negative rate.

grumiofoundation

minimike2 wrote: »

Banks are not in the business of lending money at a negative interest rate. You are confusing two very different things.

https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage

foxy-stoat

Rizzo1987 wrote: »

Hi all,

I've just fixed for 10 years, I am wondering, if the crazy world of negative interest rates ever did hit the UK, could I take out a second mortgage and use it to pay my normal mortgage?

Confused. All theoretical of course! But who knows

Yeah probably not going to help you, but if they ever did then everyone in the UK would be able to put all the banks out of business by borrowing money.