cross-posted from: https://lemmy.world/post/13611200
You've got to do more than just forego that expensive avocado toast!
this post was submitted on 28 Mar 2024
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Fair enough, but I suspect that inflation is going to go well beyond their control, and they won't think to have calculated for that much. Taking my house, for example, the interest rate on it is a little over 4%, which means that if inflation is above 4%, that they lose money. According to the government provided numbers, inflation is below 4%. However, the real numbers are quite a bit higher.
You could very well be right. However, this depends on other factors too, such as assuming you have opportunity to grow your wages in correspondence with inflation, which might not be true for a lot of people. In Norway we have the term "reallønn" (real wages) that is basically wage in relation to inflation, which one can see almost always decreases in times of high inflation (on average). So for those that have leverage to get raises beating inflation, high inflation could entail a good time to take up loans. Still, central banks also almost always respond with increasing rents subsequently, hence the answer might be maybe not so much given that paydown times often are 30 years or so.