If you are paying a fixed rate on a mortgage, is inflation then a good thing?
In: Economics
Yes and no. It’s better to pay off debt with inflated money than constant or depreciated money. That’s why there is interest, it’s the cost for present vs future money, inflation has already been baked into the cost of the loan.
The problem is when income doesn’t keep pace with inflation. When disposable income decreases due to inflationary pressure on other purchases like utilities, gas, groceries, or other inflexible goods, then the mortgage becomes more difficult because of the collateral effects of inflation, even though the mortgage payment is constant for the life of the loan.
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