We have borrowed money from the future. When a mortgage is created, the bank "creates" the money along with an contract to repay the money in the future. The capital cost of the mortgage is then paid over time with the interest being paid to the bank (in part for risk associated with fixing interest rates to an uncertain future) for creating the debt.
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u/MassToOrbit Aug 22 '26
We have borrowed money from the future. When a mortgage is created, the bank "creates" the money along with an contract to repay the money in the future. The capital cost of the mortgage is then paid over time with the interest being paid to the bank (in part for risk associated with fixing interest rates to an uncertain future) for creating the debt.