I understand the inflationary aspects of paying a mortgage with future dollars of less value. However, with todays environment involving the government cancelling and re-writing existing contracts, ala GM and Chrysler bondholders, I can see them doing the same for existing mortgages with interst rates below the rate of inflation.
They, the government, have shown they will obviously protect and enhance the coffers of the financial industry.
I know, I know, people would squeal and raise heck, but look what they have done in just six months. Just imagine, monthly mortgage payments going from a thousand bucks @ 5% to fifteen hundred @ 8%. Wow, an adjustable rate mortgage you didn’t sign up for. All for the good of the economy to prevent its collapse. Now where have we heard that before?
Yeah, interfering with private contracts (like the screwing over the Chrysler secured bondholders took at the hands of Obama and Rattner, who just quit) creates all kinds of questions and uncertainties.
It will raise the cost of capital, or cut it off completely, to companies experiencing financial troubles, due to fears that Obama socialists will simply void their collateral.
But for me, I wouldn’t bet on them somehow replacing a 5% mortgage with an 8%. It would be much easier to just raise taxes, stealthily, as they are doing now, IMO....