I’m trying to understand how would it work for mortgages.
I guess that you have no fixed interest mortgages and they are all tied to the inflation rate + some spread, otherwise I don’t see how the banks would want to lend you money for a house.
Personal credit lines are almost nonexistent or have rates which supercede inflation, (inflation+10% is not out of the ordinary). Credit card yearly interest rate for 2 years ago was >= 70%
There are preeexisting credit lines for property, but they are government subsidied mortgages with very a specific target audience. ie: salaried mid income families looking to buy their first property.
But yeah, as far as I know, at the moment there are no fixed rate mortgages.
Even then long term lending can easily go both ways, and become too cheap or too expensive very quickly.
(I lived my childhood with hyperinflation, not in Argentina, but that doesn't actually change from one place to another.)
Makes “inflated” housing look cheap. Doesn’t really make sense that it’s even offered.
A variable 2.75% with inflation at an unusually high 7% would be weirder than a fixed; a variable rate loan has a rate based on current conditions, a fixed rate loan has rated based on expectations over the lifetime of the loan (both in terms of value of money and risk of loss.)
Now, it may seem weird that you can get a 30-year fixed loan at all, but once you accept that, having the rate below current inflation when inflation has been at a unusually high level for a shirt period of time isn't particularly odd.
Is that accurate to say? Because I don't think so.
It seems more accurate to say mortgage rates for fixed loans are set by the cost of money at purchase / loan-initiation time.
Which makes sense, as that's when funds are actually changing hands (from purchaser's lender to seller).
And ultimately, that's banks' cost of money, which means then-current Fed rate + spread, no?
Nobody serious is betting inflation will remain at 7%. That was an annualised rate from a single reading.
That's Argentina's secret, there are no mortgages, properties are bought in cash.