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Consider a fully amortizing PLAM as follows. - $100,000 Mortgage - 7% Interest - 30 Years - Monthly Payments - Loan balance adjusted for CPI
Consider a fully amortizing PLAM as follows. - $100,000 Mortgage - 7% Interest - 30 Years - Monthly Payments - Loan balance adjusted for CPI every year This loan was made 5 years ago, and now the CPI unexpectedly increases by 10%. As a result, the market interest rate increases from 7% to 10%. How much value does this mortgage lose if it can be sold on the secondary market
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