Imagine that you have a fixed 30-year interest rate for your
mortgage, and the economy has experienced unanticipated inflation. Examine who
the winner and loser would be. Is it the borrower or the lender in the given
scenario? Provide support for your response.
People who take out mortgages in order to buy houses at fixed interest rates end up paying back less in real terms than they had contracted for. when actual inflation exceeds the expectation, lenders lose while borrowers benefit. In this scenario lenders are the losers while the borrowers are the winners.
May 21st, 2015
Did you know? You can earn $20 for every friend you invite to Studypool!