the homeowner would be the winner due to their fixed
QUESTION
Hi , please i need a comment and question for the post below”Unemployment and Inflation”Please respond to the following: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.In this scenario, the homeowner would be the winner due to their fixed rate mortgage. The interest rate will remain the same throughout the term of the loan as opposed to a floating rate. The lender would benefit only if the borrower were not on a fixed rate. If interest rates go up, the cost of servicing a mortgage loan will increase as well. Deflation benefits the lender because the real value of the loan increases due to price deflation.
ANSWER:
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