This research project aims to shed light on how negative interest rates affect the operation of financial intermediaries given their actual business model and their specific competitive environment. In early 2015 the Swiss National Bank moved its policy rate into the negative territory. Mortgage rates subsequently increased, contradicting conventional wisdom that expansionary monetary policy results in more lending on better terms. Based on microdata from the Swiss mortgage sector, we document this reversed transmission of monetary policy and analyze which frictions prevent monetary stimulus from being passed through. Our paper thus contributes to an understanding of how monetary policy and the stability and composition of the financial intermediation sector are related.