atans1

S’poeans will love this

In Economy, Uncategorized on 02/03/2016 at 9:06 am

If rates go so low as to become negative, borrowers are actually paid to go into debt.  If, for example, SIBOR becomes sufficiently negative, it is certainly possible that mortgages could eventually carry negative yields as well. This is bound to hurt profitability for lenders; however, they could still earn a credit spread if the bank borrows from the central bank. For example, the bank could take out a central bank loan at -4% on a mortgage issued at -1%. Here, the “borrower” is still credited 1%, but the bank is able to lock in a 3-point spread.

Read more: Negative Interest Rates: 4 Unintended Consequences | Investopedia http://www.investopedia.com/articles/investing/022616/negative-interest-rates-4-unintended-consequences.asp#ixzz41hd2vl1o
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