what impact might an economic downturn have on a borrower’s fixed - rate mortgage?\n○ it might cause a…

what impact might an economic downturn have on a borrower’s fixed - rate mortgage?\n○ it might cause a borrower’s payments to go up.\n○ it might cause a borrower’s payments to go down.\n○ it has no impact because a fixed - rate mortgage cannot change.\n○ it has no impact because the economy does not affect interest rates.

what impact might an economic downturn have on a borrower’s fixed - rate mortgage?\n○ it might cause a borrower’s payments to go up.\n○ it might cause a borrower’s payments to go down.\n○ it has no impact because a fixed - rate mortgage cannot change.\n○ it has no impact because the economy does not affect interest rates.

Answer

Brief Explanations:

A fixed - rate mortgage has a set interest rate for the life of the loan. So, the borrower's monthly payments (which are based on this fixed rate) remain constant. An economic downturn affects interest rates in general, but since the mortgage rate is fixed, the borrower's payments don't change. Option 1 is wrong as payments don't go up. Option 2 is wrong as payments don't go down. Option 4 is wrong because the economy does affect interest rates (central banks may adjust rates during downturns, but this doesn't impact fixed - rate mortgages of existing borrowers). Option 3 is correct as fixed - rate mortgages have unchanging payment amounts related to the mortgage.

Answer:

C. It has no impact because a fixed - rate mortgage cannot change.