Negative interest rates have been creeping into the European economies during the past 3 years. The ECBs relentless attempts to stimulate growth and inflation have had all kinds of consequences, just not the ones the central bankers had hoped for.

Today there is over $15 trillion of negative yielding debt around the world, and that is about to get bigger.

Denmark’s third largest bank is now offering borrowers mortgages at a negative interest rate, effectively paying its customers to borrow money for a house purchase.

Jyske Bank said this week that customers would now be able to take out a 10-year fixed-rate mortgage with an interest rate of -0.5%, meaning customers will pay back less than the amount they borrowed, or precisely what we said would happen in our 2016 preview of the dystopian future.

What this means is that if you buy a house for €1 million and pay off your mortgage in full in 10 years, you would pay the bank back only €995,000. No mortgage payments would be due between the purchase and payoff date, so effectively a borrower only has to repay principal… with a small discount, guaranteeing that the bank loses money on the loan.

“It’s another chapter in the history of the mortgage,” Jyske Bank housing economist Mikkel Høegh told Danish TV, according to Copenhagen Post. “A few months ago, we would have said that this would not be possible, but we have been surprised time and time again, and this opens up a new opportunity for homeowners.”

“In practical terms… the negative interest rate will act as a ‘subsidy’ to the repayment. And the repayment portion will become smaller and smaller as the debt is reduced,” explained Høegh.

How is that possible? “Yes, I hardly understand it either. In fact, I said it can’t happen. But we have figured out how to have a negative rate mortgage” explained Høegh.

That said, even with a negative interest rate, banks often charge fees linked to the borrowing, which means homeowners could still pay back more.

As Insider notes, Jyske Bank’s negative rate is the latest in a series of extremely low interest offers from banks to Danish homeowners.

What is even more bizarre however, is that unlike most of its European peers, Danmarks Nationalbanken, Denmark’s central bank, has held its main lending rate positive at 0.05 percent since January 2015, whereas much of Europe and Switzerland have cut their rates in deep negative territory for the past 5 years.

And while negative rates on mortgages are only now becoming available to consumers, they have been available on short-term mortgage bonds in Denmark since May, according to Bloomberg.  “It’s never been cheaper to borrow,” Lise Nytoft Bergmann, the chief analyst at Nordea’s home finance unit in Denmark, told Bloomberg.

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