2 ms·

It really isn't if the interest rate is below inflation. If it's below inflation, the mortgage is yielding real-dollar value. That's an asset in my eyes. It's

It really isn't if the interest rate is below inflation. If it's below inflation, the mortgage is yielding real-dollar value. That's an asset in my eyes. It's a calendar spread. Last year, you were buying 2021 dollars for a fixed rate (2.675% APR in my case), but you different vintage dollars over time. You owe 2022 dollars in 2022, and 2031 dollars in 2031. A 2051 dollar is almost certainly going to be worth significantly less than a 2021 dollar. So you're buying 1 2021 vintage USD, but at the extreme, you're paying it back with 2.2 2050 dollars. If we expect inflation to be an average of say, 3% over that period, each 2021 vintage USD should be worth at least 2.42 2021 vintage dollars. So in this example, you're earning real dollars over this period.

dragonwriter 5y ago
> It really isn't if the coupon rate is below inflation It's a liability in the amount of the balance. I suppose you could consider the present value of the “income” stream of the difference between inflation and interest over the life of the loan as an asset, but unless it's a very unusual loan, any income stream of that kind is likely to be a transitory effect, and interest is likely to be be a real as well as nominal expense considered over the life of the loan.
- arcticbull 5y ago
  Indeed, you are of course correct! I'm just hoping folks look at mortgages not as a strictly bad thing, but as a tool in their financial arsenal. They can be good! I think most folks are stuck in nominal dollar mode, and it can really help to look at things in real dollar terms. I think I may have been loose with my words.