Why inflation is not a threat

Re:Why inflation is not a threat by pintxo on Sunday March 14, 2021 @10:54AM (#26455905)

You still have to pay back the principal though?

    Price per Unit | Interest | Annuity     | Duration [years] | Interest payed
    -------------- | -------- | ----------- | ------------------ | --------------
     100,000.00    | 5.0%     | 12,000.00   | 10.8               | 29,626.35
     150,000.00    | 2.5%     | 12,000.00   | 15.0               | 30,040.09
     200,000.00    | 1.0%     | 12,000.00   | 18.2               | 18,876.33

Unfortunately the increase in asset price is not covered by the decrease in the interest rates. And yes, prices here have nearly doubled over the last 10 years. And you could easily get a mortgage for less than 5% in 2011 here.

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Re:Why inflation is not a threat by 542458 on Sunday March 14, 2021 @11:15AM (#26456067)

I was using the monthly cost of a 30 year mortgage. Monthly for 30 years a 500K mortgage at 6% is roughly 3K. Monthly for 30 years a 1000K mortgage at 2% is about 3.7K.

So a 100% increase in sticker price with -4% interest change yields an actual cost increase of 25%.

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Re:Why inflation is not a threat by monktastic1 on Sunday March 14, 2021 @02:17PM (#26457416)

Monthly cost of a house tells you very little about the "true cost of ownership" (a concept that I wish were taught more widely). That includes things like taxes, opportunity cost of capital, maintenance, etc. Doubling the price of the house will not quite double the TCO (because maintenance may not increase by much depending on various factors, and taxes can take time to catch up), but it will not be a mere 25% increase either.

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Re:Why inflation is not a threat by lotsofpulp on Sunday March 14, 2021 @11:58AM (#26456379)

This comparison of an increase in price and decrease in interest rate is not useful because if interest rates come down, mortgages can be refinanced at the lower interest rate.

The 100% more expensive house actually costs 100% more (nominally).

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