Information for the Question/ Task: In the years leading up to the COVID-19 pandemic, interest rates have already been on a declining trend. Harry is currently planning to borrow $300,000 to buy a house. Banks are offering monthly and fortnightly repayment terms, and home loans can range from 20 to 30 years in duration. Assume Harry will sign up for a variable rate home loan, which means that the interest rate of his home loan will change in the same direction of market interest rates.

Tasks:

• First, explain the impact of interest rates on present values.
• But if interest rates rise instead, this will affect the terms of Harry's home loan contract. Discuss two components of his home loan contract that can change (and explain the impact of these changes), in order to repay a $300,000 home loan.

(60 80 words)