In a hyper-inflation situation, what happens to mortgages/notes/etc?

[matt633]

Greetings!
With all the apocalyptic theory flying around these days, I was curious about the effects of hyperinflation on mortgages etc. I've read of the Germany thing years ago with a loaf of bread going from $1 to thousands of dollars more or less overnight, but the price of bread is subject to supply/demand. Mortgages and notes are different. I ask this partly to try and plan what I can for the future, but I also ask because our world today is totally reliant on credit/paper, and I question whether the mega powers that control our world today are going to devalue $$ so that they get paid yesterdays debts in tomorrow's dollars.
Thanks!!

 

[Moonglow]

If you have an adjustable mortgage in a high inflation period, your payments go up....................

 

[Moonglow]

Get a fixed rate, but the future has no guarantees....

 

[Dekster]

Greetings!
With all the apocalyptic theory flying around these days, I was curious about the effects of hyperinflation on mortgages etc. I've read of the Germany thing years ago with a loaf of bread going from $1 to thousands of dollars more or less overnight, but the price of bread is subject to supply/demand. Mortgages and notes are different. I ask this partly to try and plan what I can for the future, but I also ask because our world today is totally reliant on credit/paper, and I question whether the mega powers that control our world today are going to devalue $$ so that they get paid yesterdays debts in tomorrow's dollars.
Thanks!!

Where have you been? Have you looked at the decline of the purchasing power of a dollar over time? That is not an "are going to" but a "has been doing" forever.

Beyond that, getting an adjustable rate mortgage in a time with zero percent effective interest would be about the worst thing you could do. rates have nowhere to go but up.

 

[Derideo_Te]

Greetings!
With all the apocalyptic theory flying around these days, I was curious about the effects of hyperinflation on mortgages etc. I've read of the Germany thing years ago with a loaf of bread going from $1 to thousands of dollars more or less overnight, but the price of bread is subject to supply/demand. Mortgages and notes are different. I ask this partly to try and plan what I can for the future, but I also ask because our world today is totally reliant on credit/paper, and I question whether the mega powers that control our world today are going to devalue $$ so that they get paid yesterdays debts in tomorrow's dollars.
Thanks!!

There has only been one period of significant inflation in my lifetime but that doesn't mean it won't happen again. Having a mortgage during a period of hyperinflation depends upon whether it is fixed or variable. Either way you will still need a place to live and rents will increase. A fixed rate mortgage will be the best option assuming that the inflation lasts a decade or more.

Yes, hyper-inflation would reduce this nation's debt burden but there is a downside. The bulk of the debt is owed to the taxpayers in the form of treasury bonds and that would wipe out the nest eggs of retirees. Having millions of elderly fall into poverty would not be a smart political move because they are the largest voting bloc in the nation. Whomever is in power will suffer the consequences.

Right now interest rates are about to start increasing so if you are going to purchase a big ticket item like a house or a car now is the time to do it.

And just an FYI, I have personally handled a 3 billion reichsmark note from that inflationary period in Germany. It was worth about $20 in today's money and was kept as a keepsake by the owner.

 

[matt633]

Sorry, guess I should have used "fixed rate" in title. I am trying to figure out if a person has a $500 mortgage payment today and the dollar is devalued tomorrow 10-1, a one dollar loaf of bread would go to $10, but what would happen to contractual things like mortgages or other commercial paper?

 

[Toddsterpatriot]

Greetings!
With all the apocalyptic theory flying around these days, I was curious about the effects of hyperinflation on mortgages etc. I've read of the Germany thing years ago with a loaf of bread going from $1 to thousands of dollars more or less overnight, but the price of bread is subject to supply/demand. Mortgages and notes are different. I ask this partly to try and plan what I can for the future, but I also ask because our world today is totally reliant on credit/paper, and I question whether the mega powers that control our world today are going to devalue $$ so that they get paid yesterdays debts in tomorrow's dollars.
Thanks!!

I was curious about the effects of hyperinflation on mortgages etc.

Borrowers benefit from inflation, lenders are harmed by inflation.

 

[Dekster]

Sorry, guess I should have used "fixed rate" in title. I am trying to figure out if a person has a $500 mortgage payment today and the dollar is devalued tomorrow 10-1, a one dollar loaf of bread would go to $10, but what would happen to contractual things like mortgages or other commercial paper?

Your payment doesn't change if it is fixed rate. What happens is that the value of your property in dollars goes up generally because the value of the currency in relation to it goes down. Despite what a lot of people think, real estate is not really a high return on investment over the long haul compared to other things by the time you add in the taxes, interest, insurance, cost of upkeep over that 30 year loan. It is a a safety net moreso than a lottery ticket.

 

[matt633]

Greetings!
With all the apocalyptic theory flying around these days, I was curious about the effects of hyperinflation on mortgages etc. I've read of the Germany thing years ago with a loaf of bread going from $1 to thousands of dollars more or less overnight, but the price of bread is subject to supply/demand. Mortgages and notes are different. I ask this partly to try and plan what I can for the future, but I also ask because our world today is totally reliant on credit/paper, and I question whether the mega powers that control our world today are going to devalue $$ so that they get paid yesterdays debts in tomorrow's dollars.
Thanks!!

Where have you been? Have you looked at the decline of the purchasing power of a dollar over time? That is not an "are going to" but a "has been doing" forever.

Beyond that, getting an adjustable rate mortgage in a time with zero percent effective interest would be about the worst thing you could do. rates have nowhere to go but up.

 

[boedicca]

Sorry, guess I should have used "fixed rate" in title. I am trying to figure out if a person has a $500 mortgage payment today and the dollar is devalued tomorrow 10-1, a one dollar loaf of bread would go to $10, but what would happen to contractual things like mortgages or other commercial paper?

In a country with a proper Rule of Law and respect for Contracts, the mortgage would remain in effect at the contracted terms.

In a thug-o-cracy, bankster cronies would conspire with their politician henchthugs to impose regulation which changed the terms of mortgage contracts in their favor.

 

[matt633]

Sorry if I offended you dekster, don't know why you had to insult whether I was around. Just trying to figure out what happens if we have to turn in $$ for devalued replacements some day. If you had been around, you would have a real answer for me that would help me. There are other countries that have been through this besides Germany

 

[EdwardBaiamonte]

Sorry, guess I should have used "fixed rate" in title. I am trying to figure out if a person has a $500 mortgage payment today and the dollar is devalued tomorrow 10-1, a one dollar loaf of bread would go to $10, but what would happen to contractual things like mortgages or other commercial paper?

In a country with a proper Rule of Law and respect for Contracts, the mortgage would remain in effect at the contracted terms.

In a thug-o-cracy, bankster cronies would conspire with their politician henchthugs to impose regulation which changed the terms of mortgage contracts in their favor.

The important thing to do is not to elect Democrats since they have always believed in easy money or inflation to help erase debt of their constituency and in false belief that inflationary spending stimulates economy.