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At the end of the day though, I can't help but feel like myself and my countrymen are getting a raw deal. Are high interest rates lowering the cost of grocerie

At the end of the day though, I can't help but feel like myself and my countrymen are getting a raw deal. Are high interest rates lowering the cost of groceries, gas, or the cost of living in general? No. Are they blowing up everyone's mortgages one by one as they come up for renewal? Yes. Why am I, an individual, being punished for other's mistakes and mismanagement?

realjhol 3y ago
https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
frumper 3y ago
High interest rates are meant to lower inflation. That wouldn't reduce prices, but it would reduce the rate at which prices increase. It seems to be doing that. Also, the article is talking about the FED, so looking at the mortgages from a US perspective, they don't come up for renewal. If you planned on permanently low rates, then that sounds like you have mismanaged your mortgage decisions. Rates have been at historic lows, there isn't much room to go but up.
- morkalork 3y ago
  I don't live in the US but the country I do live in is closely integrated with the US and follows a very similar trajectory in terms of policy decisions. "If you planned on permanently low rates, then that sounds like you have mismanaged your mortgage decisions" this is the kind of tone deaf, consumer blaming crap that is going to get our current government booted out and replaced with a regressive, populist conservative government. Hooray. But I guess they deserve it?
  - tekla 3y ago
    > consumer blaming crap Is this how people refer to making poor decisions now?
    - FrustratedMonky 3y ago
      I think it is response to 2008 crash, where consumers were blamed for buying houses. "those stupid consumers, why did they buy houses with the home loans we gave them, it's their fault". Since 2008, this has become a more common refrain from the right, that consumers are to blame. https://www.youtube.com/watch?v=zp-Jw-5Kx8k https://www.youtube.com/watch?v=zp-Jw-5Kx8k https://www.cnbc.com/2014/02/24/5-years-later-rick-santelli-tea-party-rant-revisited.html https://www.cnbc.com/2014/02/24/5-years-later-rick-santelli-...
    - sigstoat 3y ago
      seems to be popular to believe that offering consumers a choice that might not be great for them is immoral and should be banned.
      - morkalork 3y ago
        Right, so, let's do things like abolish the FDA and bring back usury instead?
  - bombcar 3y ago
    The USA is rare in that the 30 fixed mortgage is standard and anyone who gets an adjustable or balloon mortgage is suspected of being up to something.
  - chollida1 3y ago
    > this is the kind of tone deaf, consumer blaming crap that is going to get our current government booted out and replaced with a regressive, populist conservative government. Hooray. But I guess they deserve it? But it’s also very true that they made the decisions that lead to this. I’m Canadian so I’m in a similar boat to your country. We’ve had a terrible government for thr past 10 years and they’ve made terrible spending decisions that have ruined Canada. I like your country, though, we’ll have to wait 3 more years to start to undo the damage the liberals have down to Canada so consider yourself lucky you aren’t from here:( Rates were at historical lows while a normal Historical rate was around 5%. If you planned your life around rates that were at levels never seen before then you did make a mistake and people should bear the brunt of that. That was outright gambling I’d you managed your life around rates not returning to historical norms. I feel that we should not treat people like helpless children and instead treat them like adults
  - tick_tock_tick 3y ago
    USA does fixed rated mortgages to prevent issues like this. Variable rate mortgages are risky and the average customer isn't equipped to understand them.
pc86 3y ago
> Are high interest rates lowering the cost of groceries, gas, or the cost of living in general? No. Limiting inflation doesn't necessarily mean causing deflation. > Are they blowing up everyone's mortgages one by one as they come up for renewal? Yes. This is the risk of getting an adjustable rate mortgage, which is a decision.
- BitwiseFool 3y ago
  I feel extremely fortunate that I was able to get a sub 3% fixed rate mortgage. I still can't believe that a lender was willing to bet that a 3% mortgage would be profitable over the course of the next 30 years. If I were a lender I wouldn't be happy with issuing fixed rate mortgages.
  - nly 3y ago
    Don't worry, they made a profit on your mortgage. The interest rate risk would have been hedged away in the swap market.
  - frumper 3y ago
    The lender likely sold it off. There is a good chance a Freddie Mac or Fannie Mae owns the mortgage, otherwise it may have been sold to investors. It isn't a wholly free market decision to think your loan would be profitable over 30 years.
  - medvezhenok 3y ago
    A lot of those mortgages got sold off into MBS and then got bought out by the Federal Reserve. So if you had a 3% mortgage, chances are, the FED partially subsidized your mortgage at the expense of the American taxpayer (which is what a lot of people are rightfully angry about).
    - pc86 3y ago
      Who is angry about that (rightfully or otherwise)? I hear a lot of complaints about various aspects of the mortgage industry, and the fact that the fed partially subsidizes some mortgages some of the time is not one that I hear a lot.
UncleMeat 3y ago
Gasoline is down -19.7% over the last year.
- chrisco255 3y ago
  And it's what, 50% higher than 3 years ago? Anecdotal data points are useless.
  - UncleMeat 3y ago
    It isn't anecdotal data. This is the number from BLS.
    - chrisco255 3y ago
      Yes, it's anecdotal data. That is to say, it's a single, arbitrary cherry picked data point that one cannot draw meaningful conclusions from, since it's not statistically significant. Gas prices are very volatile, and anything short of a long trend analysis will tell you absolutely nothing. Gas is more than 25% higher than it was for all of 2018, 2019, and 2020. It is trending higher, in spite of the pull back from recent highs in the wake of the Ukraine war.
shakil 3y ago
Here's a contrarian opinion: Inflation isn't all that bad, if you have a fixed rate loan (i.e. mortgage) that is larger than all your savings put together, and as long as you don't need to sell or refinance, you will come out ahead. Keep in mind inflation requires a wage/price spiral, which means your salaries are also increasing to keep pace with the rising prices, while the loan amount stays the same, so repaying it becomes easier.
- iopq 3y ago
  Well, I have enough to buy a house, but it's in stocks. They have been beating the inflation recently, but that's because the high beta ones dropped like crazy during the rate hikes so I'm just making back my losses

realjhol 3y ago

https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/

frumper 3y ago

High interest rates are meant to lower inflation. That wouldn't reduce prices, but it would reduce the rate at which prices increase. It seems to be doing that. Also, the article is talking about the FED, so looking at the mortgages from a US perspective, they don't come up for renewal. If you planned on permanently low rates, then that sounds like you have mismanaged your mortgage decisions. Rates have been at historic lows, there isn't much room to go but up.

morkalork 3y ago
I don't live in the US but the country I do live in is closely integrated with the US and follows a very similar trajectory in terms of policy decisions. "If you planned on permanently low rates, then that sounds like you have mismanaged your mortgage decisions" this is the kind of tone deaf, consumer blaming crap that is going to get our current government booted out and replaced with a regressive, populist conservative government. Hooray. But I guess they deserve it?
- tekla 3y ago
  > consumer blaming crap Is this how people refer to making poor decisions now?
  - FrustratedMonky 3y ago
    I think it is response to 2008 crash, where consumers were blamed for buying houses. "those stupid consumers, why did they buy houses with the home loans we gave them, it's their fault". Since 2008, this has become a more common refrain from the right, that consumers are to blame. https://www.youtube.com/watch?v=zp-Jw-5Kx8k https://www.youtube.com/watch?v=zp-Jw-5Kx8k https://www.cnbc.com/2014/02/24/5-years-later-rick-santelli-tea-party-rant-revisited.html https://www.cnbc.com/2014/02/24/5-years-later-rick-santelli-...
  - sigstoat 3y ago
    seems to be popular to believe that offering consumers a choice that might not be great for them is immoral and should be banned.
    - morkalork 3y ago
      Right, so, let's do things like abolish the FDA and bring back usury instead?
- bombcar 3y ago
  The USA is rare in that the 30 fixed mortgage is standard and anyone who gets an adjustable or balloon mortgage is suspected of being up to something.
- chollida1 3y ago
  > this is the kind of tone deaf, consumer blaming crap that is going to get our current government booted out and replaced with a regressive, populist conservative government. Hooray. But I guess they deserve it? But it’s also very true that they made the decisions that lead to this. I’m Canadian so I’m in a similar boat to your country. We’ve had a terrible government for thr past 10 years and they’ve made terrible spending decisions that have ruined Canada. I like your country, though, we’ll have to wait 3 more years to start to undo the damage the liberals have down to Canada so consider yourself lucky you aren’t from here:( Rates were at historical lows while a normal Historical rate was around 5%. If you planned your life around rates that were at levels never seen before then you did make a mistake and people should bear the brunt of that. That was outright gambling I’d you managed your life around rates not returning to historical norms. I feel that we should not treat people like helpless children and instead treat them like adults
- tick_tock_tick 3y ago
  USA does fixed rated mortgages to prevent issues like this. Variable rate mortgages are risky and the average customer isn't equipped to understand them.

pc86 3y ago

> Are high interest rates lowering the cost of groceries, gas, or the cost of living in general? No. Limiting inflation doesn't necessarily mean causing deflation. > Are they blowing up everyone's mortgages one by one as they come up for renewal? Yes. This is the risk of getting an adjustable rate mortgage, which is a decision.

BitwiseFool 3y ago
I feel extremely fortunate that I was able to get a sub 3% fixed rate mortgage. I still can't believe that a lender was willing to bet that a 3% mortgage would be profitable over the course of the next 30 years. If I were a lender I wouldn't be happy with issuing fixed rate mortgages.
- nly 3y ago
  Don't worry, they made a profit on your mortgage. The interest rate risk would have been hedged away in the swap market.
- frumper 3y ago
  The lender likely sold it off. There is a good chance a Freddie Mac or Fannie Mae owns the mortgage, otherwise it may have been sold to investors. It isn't a wholly free market decision to think your loan would be profitable over 30 years.
- medvezhenok 3y ago
  A lot of those mortgages got sold off into MBS and then got bought out by the Federal Reserve. So if you had a 3% mortgage, chances are, the FED partially subsidized your mortgage at the expense of the American taxpayer (which is what a lot of people are rightfully angry about).
  - pc86 3y ago
    Who is angry about that (rightfully or otherwise)? I hear a lot of complaints about various aspects of the mortgage industry, and the fact that the fed partially subsidizes some mortgages some of the time is not one that I hear a lot.

UncleMeat 3y ago

Gasoline is down -19.7% over the last year.

chrisco255 3y ago
And it's what, 50% higher than 3 years ago? Anecdotal data points are useless.
- UncleMeat 3y ago
  It isn't anecdotal data. This is the number from BLS.
  - chrisco255 3y ago
    Yes, it's anecdotal data. That is to say, it's a single, arbitrary cherry picked data point that one cannot draw meaningful conclusions from, since it's not statistically significant. Gas prices are very volatile, and anything short of a long trend analysis will tell you absolutely nothing. Gas is more than 25% higher than it was for all of 2018, 2019, and 2020. It is trending higher, in spite of the pull back from recent highs in the wake of the Ukraine war.

shakil 3y ago

Here's a contrarian opinion: Inflation isn't all that bad, if you have a fixed rate loan (i.e. mortgage) that is larger than all your savings put together, and as long as you don't need to sell or refinance, you will come out ahead. Keep in mind inflation requires a wage/price spiral, which means your salaries are also increasing to keep pace with the rising prices, while the loan amount stays the same, so repaying it becomes easier.

iopq 3y ago
Well, I have enough to buy a house, but it's in stocks. They have been beating the inflation recently, but that's because the high beta ones dropped like crazy during the rate hikes so I'm just making back my losses