[nelgaard]

It is not banks. It it credit unions and based on bonds. (banks are sometime affiliated with credit unions with similar names)

The bonds have a 0% coupon but the value is now 96.725: https://www.nordea.dk/privat/produkter/boliglaan/Kurser-real...

So the buyer of the house (seller of the bonds) would have to sell 3.3% extra bonds. And the buyer of the bonds gets a discount.

As for why anyone would buy such bonds: The system is considered very stable (no US sub-prime mess) so if you have a lot of money, do not want to take risks (stocks and forex) and your bank charges you negative interest, it might make sense.

As for the house prices. Yes they are going up. But you still have to pay back the money in 20 years. Or remortgage, but then it might not be at 0%.

Another thing to consider is that property taxes are based on a public valuation that have some correlation with what you would be paying for a house (valuations is big mess now, but it will probably be fixed in less than 20 years).