Hooray, I actually got a negative interest rate!

CHF LIBOR 3 monthsI knew that the 3 months CHF LIBOR rate, which my mortage is based on, is negative right know but I was so sure that my bank had a clause in my mortgage contract that stated that my interest rate would not go lower than zero percent so I did not really react when the papers detailing my next payment just said zero percent interest plus the contractual one percent margin for the bank.

It turned out that I was wrong!

The bank had not foresen that the interest rate would ever be less than zero percent so there is no such clause which means that they are contractually obliged to actual give me a negative interest rate on my house loan. However, the developers of their software systems had not foreseen a negative interest rate either so their systems could not cope with it.

Thus today we got a letter from the bank explaining this, apologizing and telling us that we would still have to pay the “zero percent” mortgage and then the bank would credit us for the negative part of the LIBOR rate. With this and the recent strengthening of the Swiss Franc after the Swiss National Bank let go of the pegging against the Euro, financially, this have indeed been a good start of the year for me. Perhaps it is time to knock on wood…with both hands!

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