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Yes and no: The bank wants 2% as interests, but inflation is 3% --> The Bank effectively loses money
by mnm2 9y ago
Yes and no: The bank wants 2% as interests, but inflation is 3%
--> The Bank effectively loses money
- icebraining 9y agoIsn't that only true for fixed-rate mortgages? At least around here, almost all are variable-rate, so they rise with inflation. I think banks only really lose money on defaults, and that's if the house lost value.
- yellowbeard 9y agoThe bank only has to have a very small percentage of the money they loan you. Most of it is created at the time of the loan.
- teekert 9y agoExactly, the bank is not hurt from money devaluating when they don't have to do anything for it but create a dept in their books. Sure, what you will pay them will be less in 20 years but it more than the nothing they had before...