And not irresponsible borrowers, mind you, but people who bought a home at a then reasonable cost to raise their family in. They end up losing it if the currency deflates.
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Wouldn’t a fixed loan interest rate payment stay the same?
Yes. Imagine that prices rapidly drop and the value of money rapidly increases (deflation). The opposite of inflation.
In reaction employers simply cannot afford to pay employees the same amount. The cut pay. And people are okay because prices have already dropped like a rock.
But now those with a mortgage are making half their salary but the payment stays the same. Uh oh.