Tag Archives: Denmark

How a bank could still make money offering negative interest rate mortgages

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A bank in Denmark explains how they can make money by offering mortgages with interest rates below zero:

Jyske Bank has had to do a lot of clarifying; there’s a widespread misconception that the bank is actually paying borrowers to take their money. First of all, the bank is not actually paying anyone; it is simply forgiving part of the loan each time a payment is made. A mortgage borrower is likely to end up paying Jyske back a little more than they borrowed, factoring in fees and charges associated with arranging the mortgage loan.

And the bank can afford to do this without losing money because it borrows at negative interest rates as well…

Despite being in “historic remortgaging,” Høegh said the negative interest rates don’t actually make it any easier for home buyers to get a loan, but makes it easier to get a bigger loan – a lower rate means a higher disposable budget.

As long as the borrower is paying more in interest than the mortgage cost the bank, there is money to be made.

I might be showing my ignorance here but it leads to a few more questions:

1. Does this change how much volume in mortgages banks and lenders need to make in order to make money?

2. Would an extended period of such mortgages lead to inflated housing values because people can pay more for homes?

3. These changes might not be so bad in a fairly stable housing market but I wonder if there would be more issues in a high-demand or high-price market.

It looks like we would have a ways to go before negative rate mortgages come to the US but it would be interesting to see what happens if they do come.

Building a 1,000+ foot skyscraper in a rural town of 7,000 residents

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Skyscrapers and cities are tightly linked. Can one be built in a small town in the countryside?

Until a local company announced plans to send a 320-metre skyscraper soaring over the surrounding countryside, most people in Denmark had only the haziest idea where Brande, a town of 7,000 people in rural Jutland, even was.

The Bestseller Tower, designed by star architectural studio Dorte Mandrup, will not only be the tallest building in Denmark, but the tallest in western Europe, besting the Shard in London by a crucial 10.4 metres…

It won’t be the first rural skyscraper. At the height of Japan’s property bubble back in 1991, a 41-story residential tower, Sky Tower 41, was erected among fields.

But in Jutland, the surrounding landscape is so flat that the tower will be visible from 60km away. Visitors to Jelling, the royal seat of Harald Bluetooth, the Viking king who united Denmark, will see its slender form jutting up from the horizon, as will visitors to Legoland 30km away.

While the article suggests it will not be the only rural skyscraper in the world, they are certainly rare. They are rare enough outside of sizable central business districts that numerous tall buildings in the Chicago suburbs – probably in the 20 to 30 stories in height – attract attention as unusual and sticking out in the landscape in a metropolitan region that takes pride in its tall buildings and architecture.

It is certainly possible to build such a structure almost anywhere but I wonder how this will all work out in day-to-day life in this community. Small towns and rural areas have a particular scale that people are used to and that is human scaled or even dominated by nature and landscapes rather than human creations. Constructing a building over a 1,000 square feet disrupts all of this: it will be visible for miles, it will dwarf anything nearby, and it will cast shadows and block the sun from certain angles. It is not slightly out of scale for this community; it is a massive change. It could be beautiful, modern, and efficient and still have negative consequences for the community.

 

Four steps for city dwellers to improve winter

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The Danish concept of hygge may have the four part secret for surviving winters in dense settings:

Hygge principle: Warmth. Unlike some American cities, where snow seems like a shocker year after year, Scandinavian cities acknowledge and build for their cold climate, with higher energy standards for walls and doors, vestibules that prevent drafts, coat racks for winter gear, and public plazas that block wind and capitalize on southern sun. Then there’s the ritual of the sauna…

Hygge principle: Light and color. With far fewer hours of sunlight, wintertime contentment relies on literal or metaphorical brightness—hence the typical Danish scenes of candle-bedecked dinner tables and windows laced with twinkle lights, or Copenhagen’s streets with their famous Crayola-colored buildings…

Hygge principle: Access to nature. While hygge’s overarching style seems to be an indoorsy, “cocoa by the fire” feel, Pia Edberg, author of The Cozy Life: Rediscover the Joy of the Simple Things Through the Danish Concept of Hygge, points out that experiencing nature is elemental to hygge. “As the old saying goes: ‘There’s no such thing as bad weather, only bad clothes.’”…

Hygge principle: Gathering places. Perhaps the most important antidote to winter’s isolation is hygge’s emphasis on communal gathering and social connection. In Copenhagen, privately owned third places—restaurants, bars, cafes, bookstores—are as central to the wintery social life as public squares are in the summertime.

The American way of rugged individualism may lead to many long cold winter nights…

Really, though, these adaptations to climate are interesting to consider. Every so often, you will find people making arguments that places like the Sunbelt in the United States are attractive because of their warmer weather. But, how much is this a factor versus other possible factors? Or, how is it that many countries along the equator and in tropical zones are outside of the first world? Would New York be the leading global city in the world if it had a climate like Miami or Cairo? In this case of Denmark, is it more about a different kind of society – the Scandinavian way of life that seems to make it to the top of a number of rankings for best places to live – rather than an approach to winter?

At the same time, it wouldn’t hurt to have more fun during the winter months. The weather and lack of sun from Thanksgiving to New Year’s doesn’t seem to prompt the same kind of despondency prompted by January and February.