Unintended Consequences – Mortgage Borrowing Costs Rise in Switzerland Despite Negative Interest Rates

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Wait a minute, this wasn’t supposed to happen…

From Business Insider:

Remember back in December when we highlighted that one of the responses to central banks’ introduction of negative interest rates might actually be a raising of interest rates by banks to borrowers?

The bank’s preferred solution then might be to keep income up by widening the spread between deposit rates and borrowing rates by increasing the interest rate charged to borrowers. And thus dropping into negative interest rates on deposits can lead to a rise in interest rates for borrowers.

Well, that apparently is happening in Switzerland, whose central bank has had negative interest rates for over a year.

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