If your mortgage payments are fixed, but your pay increases with inflation, your real monthly mortgage payment goes down over time.

That if is doing so much heavy lifting it just qualified for the Olympics. The problem with inflation is that your wages don't keep up with it.

Yeah. He borrowed money for a house at 1.5%. Then inflation hit almost 10 during covid and our salary didn't fully cover this but was raised way more than 1.5%. Money lost value much faster than his debt increased, so the banks effectively lose money on him while his paycheck grows faster than his debt increases.

Actually its the inverse. Borrower A is borrowing the equivalent of $105 and borrower B is borrowing the equivalent of $125 and after 5 years the amount they borrowed is equivalent to $160.

Let's put this into more real terms. Lets say 30 years ago borrower C got a $100k mortgage at a 6% interest rate. Ignoring everything else that often gets lumped into "the house payment" (insurance, property taxes, HOA/condo association fees, closing fees, etc.) their monthly mortgage payment would be $599.55 for the entire lifetime of that mortgage. That $100k in 1995 dollars that was borrowed would be about $210k when adjusted for inflation. Those 360 payments would also conveniently equal out to roughly $215k meaning they effectively were loaned the money for free over the timescale, and that loan payment of $600 in 1995 is still a loan payment of $600 in 2025 despite the fact that that $600 in 1995 dollars is equivalent to about $1200 today.

Basically with inflation, property ownership ensures a roughly decreasing cost of living over a lifetime and property has a tendency to gain value faster than a dollar does, so ultimately being able to get a mortgage creates wealth for the individual by stabilizing costs that would otherwise grow indefinitely and they gain an asset that generally increases in value.

Inflation, in absolute terms, is a larger benefit to people with higher interest rates.

Fair enough. I'm more thinking in a discrete sense... "saving money" versus "owing money"... rather than implicitly how much less are you paying.

That's a historically unusual artifact of the financialized housing market in a country where the population outpaces new available housing units while the economy continues to grow.

Go to Italy or - God forbid - Iraq or Ukraine or Myanmar, and you'll find record inflation combined with falling real estate values. Buying a home in Lebanon or El Salvador or Bulgaria in 1975 wasn't a good move. You had to be a certain proximity near the US/EU money printing machines and a distance from the US/Russia bomb dropping machines to get that arbitrage to work.

As in, the rate of inflation was added to the mortgage rate you were offered. This is because tax incidence falls on the less elastic side of each trade, and credit supply is much more elastic than housing demand.