Question

Suppose that inflation is 2%. According to the data given in the article, what is the new real rate of interest on a 30-year mortgage

Answer 1

Answer:

1.56%

Explanation:

Note: The full question is attached as picture below

Real rate is the excess of nominal rate over inflation rate. (i.e Nominal rate - Inflation rate).  So, the new real rate of interest on the 30-year mortgage = Nominal rate - Inflation rate = 3.56% - 2% = 1.56%