Final answer:
A fixed-rate mortgage has a constant interest rate throughout the life of the loan, while an adjustable-rate mortgage changes with market interest rates. If inflation falls unexpectedly by 3%, it is likely that the interest rate on an adjustable-rate mortgage would also fall by the same percentage to maintain the real interest rate.
Step-by-step explanation:
In this case, we are dealing with mortgages, which fall under the subject of Mathematics. Specifically, we are looking at the concept of fixed-rate and adjustable-rate mortgages.
A fixed-rate mortgage has a constant interest rate throughout the life of the loan, whether it is for 15 or 30 years. On the other hand, an adjustable-rate mortgage changes with market interest rates during the course of the mortgage.
If inflation falls unexpectedly by 3%, it is likely that the interest rate on an adjustable-rate mortgage would also fall by the same percentage to maintain the real interest rate. This would benefit homeowners with adjustable-rate mortgages as their monthly payment amount would decrease.