[mnm2]

Yes and no: The bank wants 2% as interests, but inflation is 3%

--> The Bank effectively loses money

[icebraining]

Isn't that only true for fixed-rate mortgages? At least around here, almost all are variable-rate, so they rise with inflation.

I think banks only really lose money on defaults, and that's if the house lost value.

[yellowbeard]

The bank only has to have a very small percentage of the money they loan you. Most of it is created at the time of the loan.

[teekert]

Exactly, the bank is not hurt from money devaluating when they don't have to do anything for it but create a dept in their books. Sure, what you will pay them will be less in 20 years but it more than the nothing they had before...