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Deposit Arbitrage
Consider a classic case: buying an apartment with a mortgage to "rent it out." If the mortgage rate is 18% and rental yield barely covers 4-5%, you are subsidizing the bank every month by paying the substantial difference out of your own pocket.
This model only works with aggressive real estate price growth, which is highly unlikely in a high-rate environment. By buying an asset with negative cash flow, you are not investing; you are taking on increased risk.
Simple arithmetic shows that renting similar housing and keeping the remaining funds in a deposit is more profitable than buying with debt load. Don't ignore the obvious difference in numbers.
#mortgage #finance #rent