Expected the inflation rate to average length of mortgage

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Reference no: EM13810415

Assume you are a banker and want a 4% real rate of return on your loans. if you expect that the inflation rate will average about 6% over the next thirty years, what rate should you charge your customers for a thirty year fixed rate mortgage? How would your answer change if your expected the inflation rate to average 4% over the length of the mortgage?

Reference no: EM13810415

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