101

Business

Not wanted: variable-rate mortgages

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October 18th, 2013


This article is more than 11 years old.

As part of an effort to encourage homeowners not to take mortgages with variable interest rates, Jyske Bank says it plans to introduce a form of home loan that will provide a fixed 30-year interest rate that is lower than what is currently offered by traditional mortgage lenders.

Despite warnings from financial advisors, variable, 1-year mortgages remain popular among homeowners, due mostly to their historically low interest rates, currently around 0.4 percent per year.

To nudge people into taking longer-term mortgages, mortgage lenders have raised the fees they charge individuals holding 1-year mortgages.

With the price increase, Jyske Bank says it can now offer a competitive product, even though its interest rate is higher.

Economists welcomed the new product, but were concerned that its price structure was less transparent than traditional mortgages. 

Berlingske Business

SEE RELATED: Thousands of homeowners cheating themselves, bank says

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