Why does the Mortgage amount decline in the Housing section of report

Housing expenditures fall year over year, because the Mortgage amount falls year over year. Property tax and insurance are constant. What is causing the mortgage number to fall? The actual payment is fixed. I thought it might be inflation, but I thought all the numbers in the report were in today's dollars.


dan royer's picture

So, yes, you are on the right track. The mortgage is fixed in nominal dollars--that is, your mortgage payment does not go up with inflation each year but rather you keep paying the same nominal amount. So, relative to current-year dollars, you are paying off with cheaper dollars each year. Prop tax and insurance on the other hand are assumed to keep pace with inflation and thus hold steady in today's dollars year after year.

I see the same phenomenon with my wife's pension. It's an annual amount that is not indexed to inflation--we get the same nominal payment year after year. So in the reports which show everything in 2018 dollars, I see this amount declining each year which is the proper and real way to look at it in the context because that pension purchases less and less each year.


We use cookies to deliver the best user experience and improve our site.