yea, that is essentially inflation (via the UF index) + 3%, or 2%, or whatever the interest rate is. Keep in mind, one way or the other, your properties are also indexed to the UF. A 3% increase in the UF, is a 3% increase in the underlying market value, expressed in pesos.
Inflation is suppose to run about 2% total this year, mas o menos. We have had a few months where it was essentially zero this year. I think central bank is trying to outrun the possibility of deflation(more like stagflation) developing by cutting rates so drastically.
Seems, from the central bank minutes, the central bank was all on board with cutting .75, but they did not want to spook the economy by doing it. So they only cut 0.50
https://www.df.cl/noticias/economia-y-p ... 01814.html
I am not really sure how to read that, or if I am interested in playing chicken with betting on another rate cut vs. refinancing now. Think I will take my 2% and run.
If they continue to make dramatic cuts, then I will bug my executive again next year.
That said, an annalist I read this morning made a good point. It is not only what you save on your mortgage, but also how asset prices are inflated by low interest rates. Their guestimates of people refinancing now, are looking at about a 25% gain on their property investment between low cost of ownership and price appreciation.
I am highly suspicious if they will cut rate further. Perhaps one or two more quarter point cuts to stay ahead of the U.S. fed, but once we cycle out of the low economic activity months (e.g. winter), I expect inflation will pick up a bit, unemployment will drop, etc, etc. We got mega stimulus packages in the pipe, gas prices will rise a bit, perhaps we get a bit of goose to the copper price, causing the peso to strengthen.
If you are buying with U.S. dollars, the peso is also pretty good right now.