Final answer:
No, the payment on an adjustable rate mortgage (ARM) will not always stay the same since the interest rate changes with market conditions like inflation. If inflation falls by 3%, it is likely that the interest rate on an ARM would decrease, leading to lower monthly mortgage payments for the homeowner.
Step-by-step explanation:
If you have an adjustable rate mortgage (ARM), your payment will not always stay the same for the length of the mortgage. This statement is false. With an ARM, your interest rate may change based on market conditions, such as fluctuations in inflation. Specifically, if inflation falls unexpectedly by 3%, it is likely that the interest rate on an adjustable rate mortgage would decrease. This decrease would reflect an adjustment parallel to the fall in inflation to maintain the real interest rate. Consequently, the homeowner's monthly mortgage payments may decrease as well.