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Inflation coupled with wage growth is great for homeowners. Mortgage payments are inflation-proof.
by thehappypm 5y ago
Inflation coupled with wage growth is great for homeowners. Mortgage payments are inflation-proof.
- procinct 5y agoInteresting, in NZ you have an interest rate you pay to the bank for your mortgage that has to be renewed every few years. This interest rate is definitely impacted by inflation. Does the US/where you are from not have a similar system?
- MontyCarloHall 5y agoNope. Most mortgage rates are fixed for the full term of the loan (typically 30 years). If you can afford the down payment, it’s a great time to buy a house. (Even better would have been a few months ago, before inflation started to kick into high gear).
- WanderPanda 5y agoHow much interest do you pay on a 30 year fixed interest mortgage? Seems like a total no-brainer if it is below 2-3%
- dominotw 5y ago2 - 4% these days. Its only a no brainer only if property prices never go down, which does seems to be the case these days.
- procinct 5y agoHoly shit that is insane. You’re right, that is indeed inflation proof. Is this the US?
- thehappypm 5y agoYes. Fixed mortgages are the norm.
- neltnerb 5y agoThere are several varieties, fixed rate mortgages exist for 10-30 year terms. Adjustable rate mortgages also exist and commonly with a lower starting interest rate, but they are often a trap for people with low incomes who suddenly cannot afford their home because of interest rates outside their control. And some mortgages have a cliff, so that you're paying mostly just interest and very little principle. Then at the end of the term you basically have to pay the entire principle at once. So you can do it either way. A fixed rate is vastly less risky, I'm surprised that an adjustable rate is the default in NZ. In the time I've had a home rates have varied from like <3% to 7%.
- procinct 5y agoWe have fixed and floating. But generally the absolute max you would fix for is 5 years. People commonly fix for 1 year.
- nly 5y agoIn the US. In the UK it's normal to refinance every few years. Fixed rates of 2-5 years are common and 20% or so of people are fully variable.
- nugget 5y agoProperty taxes and maintenance costs are not, however.
- noduerme 5y agoThere's not much to like about the California tax code, but prop 13 is one good thing there. It caps the rate of property tax increase at 1% per year. Whereas my property tax in Oregon is up 10% this year. That's a tax on an unrealized gain. Worse, it's not even a real gain, it's a tax for just keeping pace with inflation.
- CogitoCogito 5y agoProposition 13 is good for those who have had a property for a long time, but it's certainly not good for new buyers. They are effectively subsidizing long-term residents. I understand why property owners might like it after they've been somewhere for a while, but I personally find it fundamentally unfair.
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- noduerme 5y agoBased on that reasoning, is rent control also unfair?
- throwaway0a5e 5y agoAnd it screws everyone who isn't in debt up to their eyeballs on their home.
- deleted 5y ago[deleted]