Reply to thread

Message

<blockquote data-quote="How bad boy" data-source="post: 7023440" data-attributes="member: 3028">Almost certainly. People on fixed incomes such as those on benefits or pensions regularly get screwed badly by inflation, the increases to their incomes rarely match the rate. Some poorly paid people will do reasonably well out of it, in particular if you&#039;ve got a relatively long, large fixed interest mortgage. Say you&#039;re mortgaged to the hilt, have a $500k mortgage at 3% over the 25 year term, and $50k income, a 10x multiple. You&#039;d be paying $2k a month and effectively stony broke.After 1 year, you&#039;d have only paid back about $9k, but if your salary is raised at current inflation rates, then next year you&#039;d be earning about $54k, on a $491k loan, a 9x multiple, dropping to 8.2x the next year, that&#039;s a rapid improvement in circumstances. So it&#039;s likely to be highly situational dependent. Inflation tends to be pretty good for those on variable incomes that have high levels of debt at pre inflation interest rates.</blockquote>

[QUOTE="How bad boy, post: 7023440, member: 3028"] Almost certainly. People on fixed incomes such as those on benefits or pensions regularly get screwed badly by inflation, the increases to their incomes rarely match the rate. Some poorly paid people will do reasonably well out of it, in particular if you've got a relatively long, large fixed interest mortgage. Say you're mortgaged to the hilt, have a $500k mortgage at 3% over the 25 year term, and $50k income, a 10x multiple. You'd be paying $2k a month and effectively stony broke. After 1 year, you'd have only paid back about $9k, but if your salary is raised at current inflation rates, then next year you'd be earning about $54k, on a $491k loan, a 9x multiple, dropping to 8.2x the next year, that's a rapid improvement in circumstances. So it's likely to be highly situational dependent. Inflation tends to be pretty good for those on variable incomes that have high levels of debt at pre inflation interest rates. [/QUOTE]

Verification