If you are paying a fixed rate on a mortgage, is inflation then a good thing?
In: Economics
When you take a loan you get money today, which you pay back at a later date. Inflation means that value of money is decreasing, so yes inflation is good. In other words inflation means you get more value out of money today than at whatever date you have to pay it back.
However a fixed rate mortgage is essentially a bet against the bank. They predict inflation and therefore interest rates going forward and charge you based on this. So inflation is not enough, you need more inflation than expected for it to be “good”. If you are really lucky you can end up with with a fixed mortgage with lower interest rates than a savings account. This have happened to many people that took a fixed interest loan around 2021
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