The Math Says Keep Your 2.6% Mortgage Forever—So Why Are So Many Investors Racing to Pay It Off?

Core Perspective - A debate is emerging within the r/Bogleheads community regarding the decision to pay off low-rate mortgages from the pandemic era, weighing financial logic against emotional well-being [1] Financial Analysis - The prevailing mortgage rate of 2.6% is viewed as an exceptional opportunity, leading to a strong arbitrage argument favoring the retention of such debt [3] - Current yields on U.S. Treasuries are around 4%, with high-yield savings accounts and money market funds offering over 4.3%, creating a positive spread of approximately 1.4 to 1.7 percentage points with no additional risk [4] - With inflation exceeding 2.6%, the real cost of the mortgage decreases annually, making homeownership more affordable over time [5] - Investing an extra $1,000 per month at an 8% return instead of paying down the mortgage could significantly reduce the loan term and leave substantial capital available [5] Emotional Considerations - A notable segment of r/Bogleheads members who have paid off mortgages with rates between 2.8% and 3.5% report feelings of happiness and freedom, indicating that emotional satisfaction can outweigh financial calculations [6]