3 ms·

If things continue, in 5-10 years, dollars will be worth 50 cents, and it should be MUCH easier to pay your mortgage. And, I'll eat my hat if we don't get back

If things continue, in 5-10 years, dollars will be worth 50 cents, and it should be MUCH easier to pay your mortgage. And, I'll eat my hat if we don't get back to ZIRP sometime in the next 10 years.

myth_drannon 3y ago
That's not going to happen, salaries are depressed and are not keeping up with inflation by a large margin.
- dragonwriter 3y ago
  The balance on an existing loan doesn’t increase with inflation, though.
  - myth_drannon 3y ago
    Yes, but the interest payments on mortgages with variable rates had doubled. Now some people basically are paying interest only without paying off their principal amount.
    - onlyrealcuzzo 3y ago
      <2% of US homes are on variable rate mortgages.
    - red-iron-pine 3y ago
      Most folks aren't on variable rates. If you're on a fixed 15-year or 30-year then inflation is generally working in your favor. Salaries not going up is not directly related to mortgages, and while I can't speak to all jobs, has been pretty good in the STEM field.
- yamtaddle 3y ago
  Everyone freaked out about rising wages because they saw fast-food worker "we're hiring" signs offering $17/hr... meanwhile the $20/hr worker nearby saw a 1.5% COL raise in a 10+% inflation environment (and higher inflation on the cost of things that actually matter).
hhvn 3y ago
Atleast for the past few decades, salaries have increased less than what's needed to compensate for the change of value of the currency. Meaning the amount you make each year will on average be worth less.
- candiodari 3y ago
  The loan amount, however, will stay contant. Your pay goes up. It just goes up 4% per year, while inflation goes up 10%. This does mean your loan becomes 4% "less" per year. It's just Big Macs go up 6%, making your pay worth less Big Macs. But your pay still becomes worth more loan repayments. The big increase only applies to new loans. I would also like to point out that at 4% per year pay increases, houses become worth that amount less per year, for the same dollar amount. That means they "drop" 20% in price over 5 years.

If things continue, in 5-10 years, dollars will be worth 50 cents, and it should be MUCH easier to pay your mortgage. And, I'll eat my hat if we don't get back to ZIRP sometime in the next 10 years.

myth_drannon 3y ago

That's not going to happen, salaries are depressed and are not keeping up with inflation by a large margin.

dragonwriter 3y ago
The balance on an existing loan doesn’t increase with inflation, though.
- myth_drannon 3y ago
  Yes, but the interest payments on mortgages with variable rates had doubled. Now some people basically are paying interest only without paying off their principal amount.
  - onlyrealcuzzo 3y ago
    <2% of US homes are on variable rate mortgages.
  - red-iron-pine 3y ago
    Most folks aren't on variable rates. If you're on a fixed 15-year or 30-year then inflation is generally working in your favor. Salaries not going up is not directly related to mortgages, and while I can't speak to all jobs, has been pretty good in the STEM field.
yamtaddle 3y ago
Everyone freaked out about rising wages because they saw fast-food worker "we're hiring" signs offering $17/hr... meanwhile the $20/hr worker nearby saw a 1.5% COL raise in a 10+% inflation environment (and higher inflation on the cost of things that actually matter).

hhvn 3y ago

Atleast for the past few decades, salaries have increased less than what's needed to compensate for the change of value of the currency. Meaning the amount you make each year will on average be worth less.

candiodari 3y ago
The loan amount, however, will stay contant. Your pay goes up. It just goes up 4% per year, while inflation goes up 10%. This does mean your loan becomes 4% "less" per year. It's just Big Macs go up 6%, making your pay worth less Big Macs. But your pay still becomes worth more loan repayments. The big increase only applies to new loans. I would also like to point out that at 4% per year pay increases, houses become worth that amount less per year, for the same dollar amount. That means they "drop" 20% in price over 5 years.