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Explaining the inflation rate (lemmy.world)

submitted 2 months ago by The_Picard_Maneuver@lemmy.world to c/whitepeopletwitter@sh.itjust.works

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[–] KevonLooney@lemm.ee 1 points 2 months ago

Yes, it's the "expected rate" at the time you get the loan. Guess what banks expect when inflation is low? They expect it to stay low. These are fallible people, not emotionless machines.

Banks are run by people who are not going to be around in 30 years when your loan matures. The people who approved all those 3.5% loans in the 2010s do not care that they essentially lose the bank money when inflation is higher. Plus the original bank probably sold the loan to some dumb investors long ago. That's who takes a bath when interest rates rise (due to inflation).