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Mortgage nation. The 'wealth effect' that drives big bank's super profits (michaelwest.com.au)

submitted 6 days ago by maniacalmanicmania@aussie.zone to c/ausfinance@aussie.zone

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[–] hanrahan 2 points 6 days ago (1 children)

Wealth effect ? Sigh... More and more debt.

A dwelling-house, as such, contributes nothing to the revenue of its inhabitants". - Adam Smith - The Wealth of Nations

[–] Nath@aussie.zone 1 points 6 days ago (1 children)

How does Mr. Smith reach that conclusion? Most of the nation's millionaires are that wealthy because they purchased houses 20+ years ago and they can sell them for over $1 Million now.

That said, the house I live in is not making me rich. If my landlord has a mortgage on it, my rent more than covers the repayments on it. If he bought it outright, then the rent I pay him is pure gravy. It's contributing something to his revenue.

[–] DavidDoesLemmy@aussie.zone 1 points 5 days ago

It's not pure gravy. There's an opportunity cost in having that money tied up in a house. Plus there are other obligations on a landlord beyond mortgage payments.