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2703: Why Paying Off the Mortgage Early May Be a Big Mistake by Len Penzo on How to Fight Inflation
Optimal Finance Daily - Financial Independence and Money Advice
Effects of Hyperinflation on Mortgage Payments and Household Expenditures
During hyperinflation, rent control became common practice to prevent civil unrest, making mortgage payments negligible for homeowners but worrying mortgage banks. Fixed rate mortgage holders benefited as hyperinflation made debts trivial and allowed for early repayments. Financially savvy individuals could repay substantial loans with minimal effort due to the devaluation of the currency. Household expenditures shifted drastically with the devaluation of the mark, with renters and mortgage holders allocating only a small percentage of their income towards shelter. Wages historically tend to keep pace with inflation, providing incentives for work. The possibility of government intervention to revalue mortgages during hyperinflation is a consideration.
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