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You can definitely default on a negative rate mortgage, by not paying your monthly payment. You cannot pay nothing each month. Instead, the principal reduces each month by more than the amount you paid. You still have a term over which you have to pay the mortgage off. No-one is offering (or will offer) a negative interest rate _interest only_ mortgage.

Negative interest rates make sense if you consider them as a lender trading current cash-on-hand for future cash flow. That is, the bank has $200k today, but it would rather see that broken up into payments over 10 years, even if it has to pay you to do it.

When viewed through this lens, it becomes clear that the factor driving this is likely that the bank is being disincentivised from storing the cash directly.




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