One thing I see that gets left out of this advice is that only works if you get a pay raise.

The whole idea that inflation eats into future debt assumes that your pay inflates alongside your expenses.

Inflation doesn't magically make debt cheaper, your rising salary does.

Also some of the assets you buy with your debt (say, a house) are also potentially losing value with inflation (and higher rates) in the mix.

but if you buy canned goods, and finance with negative interest rate debt, that's a winner.

Thats only if your earnings will also grow, keeping you ahead of the curve of growing interest rates, which will not be the case for great majority of workers.

I have a mortage in Poland. Base rates went from 1.5% to 6.75%. My mortage’s monthly payment went from 1792PLN to 3200 PLN (~715 USD), where 3000 PLN is interest. This is not big enough to bankrupt me, but 1000 PLN is a lot of money here and a lot of people feel the pressure so our govt enacted law that lets you move four rates in a year to the end of mortage for two years, effectively extending the mortage by 8 months, but at no base cost of mortage changing.

> I have a mortage in Poland. Base rates went from 1.5% to 6.75%. My mortage’s monthly payment went from 1792PLN to 3200 PLN (~715 USD), where 3000 PLN is interest.

Are fixed-rate mortgages not the norm in Poland?

My understanding was that long-term fixed rate mortgages were not common at all outside of the US and like France.

This is from 2010 but has some good charts. https://business.sdsu.edu/_resources/files/real-estate/resea...

Anecdotally it meshes with some things I've heard elsewhere but don't hold me to it:

- Canadian mortgages are typically something like 5 years.

- UK is similar, it's either variable, or fixed for something super short, like 2-3 years.

- Australia same kind of boat, most are variable, I've heard the interest rates during covid temporarily reversed the trend, but same deal, they're only fixed for a few years.

That's kind of wild, even in my teens (1990s in Illinois) it seemed to be common knowledge that variable APR mortgages were a risky/Bad Idea. I had no idea they were the norm elsewhere.

The cynic in me would have assumed the US led the world in predatory style lending. This country loves handing people more than enough rope to hang themselves with, while depriving them of any relevant education beforehand.

No. Bank oversight comission required banks to offer fixed rate mortages only after swiss franc mortage crisis (2009), and not shorter than 5 years. What happened was banks introduced fixed mortages for 5 years, after which time you move to variable mortage, or update rates for next 5 years.

Banks also made those mortages noticably pricer, so few people picked them (me included).

Even if people who took the low mortgage counted with a rate hike like yours they probably didn’t count with the energy prices hiking so much AND the food prices hiking so much AND all of this happening within ~9 months.

It is truly bad for a lot of people right now.

This doesn’t make sense.

Wages are decreasing. Companies are using inflation and recession fears to not just stagnate wages, but actually lower them. Public and private sectors are doing massive layoffs.

No. This is a bad idea.

Are you sure? Inflation is slowing but your interest rate will remain the same. You run the risk or being laid off, and you most likely not going to see any huge inflation adjusted salary increases anytime soon.

Wouldn't the opposite be true?