I remember car loans at over 20% and being pumped when our mortgage rate dropped below 10%
We always locked in to the 5 year fixed and over paid. This really has been an amazing run of low interest rates. Forces people into higher risk retirement investments.
http://www.cbc.ca/amp/1.4505207
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For whatever it is worth, inflation may be coming back to some extent, but I very much doubt you'll be seeing it hit double digits again.
ReplyDeleteIt's just that inflation has been abnormally low for so long that we've forgotten what normal and healthy inflation looks like. It is actually not a great thing at all to be stuck at the zero interest rate bound. You need it to be higher than that if you want higher economic growth rates. A bit of inflation helps grease the engine.
But for people who are over extended just a percent or so can put them under water.
ReplyDeleteCass Morrison Yeah, it's a balancing act. And too high inflation tends to destroy savings.
ReplyDeleteAt the same time high inflation helps wipe out debt.
Modern central banks like to get it around 2-3% and believe this is the sweet spot. But in most of the developed world they haven't been able to meet those targets for years.
Yeah, I remember that, too. I remember the first condo I owned, where interest rates were starting to fall, and how many people in that unit were completely underwater.
ReplyDeleteBut this generation of kids (in the US) haven't seen affordable housing in a while, so if there's higher interest, well...
Oh...eighties, eh?
ReplyDeleteI feel for my youngest really hitting the home buy household keeping age at a bad spot.
ReplyDelete