Post
Topic
Board Economics
Re: Lenders and borrowers during inflation
by
bitzizzix
on 18/08/2022, 16:33:25 UTC
Traditionally, borrowers have benefited more from inflation, because the money they pay back is worth less than when they borrowed it. That is why, when inflation rises, the interest rate charged by lenders also rises.
e.g. If I borrow 3% money to buy a house for $50,000, and inflation rises to 6%, over time I have paid back significantly less than the purchasing power equivalent of my original loan.