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If you've studied interest rates on loans, the interest rate charged is X+Y, where X is the "real" interest rate, and Y is the inflation rate. I.e. people who
by skookumchuck 9y ago
If you've studied interest rates on loans, the interest rate charged is X+Y, where X is the "real" interest rate, and Y is the inflation rate.
I.e. people who loan money are not stupid, and you're not getting any bargain because of inflation.
- saalweachter 9y agoWhich loans are you getting? My mortgages are all using a fixed repayment plan, where the interest rate, payments, and repayment duration are fixed on day one. If the inflation rate doubled or halved next year, my loan terms won't change and I'd end up repaying less or more money, relatively.
- skookumchuck 9y agoFor fixed mortgage rates, the inflation over the period of the note is guessed at. The reason fixed mortgages charge more interest than adjustable ones is to take into account the risk of inflation increasing. Many other loan rate, such as margin interest, are "prime rate plus X". The prime rate is inflation plus a constant. Again, the people loaning out the money are not fools about inflation.