Final answer:
The determination of whether it's more beneficial to be a borrower or a lender in a given year depends on comparing mortgage interest rates to inflation rates. Borrowers typically benefit when the interest rate is below inflation, while lenders benefit when it is above. Mortgage loans are valued based on what they could be sold for in the secondary loan market.
Step-by-step explanation:
When deciding whether it's better to be a borrower or a lender in the context of a mortgage loan, one must compare the mortgage interest rate to the rate of inflation for any given year. In years where the mortgage interest rate is lower than the rate of inflation, it would generally be better to be a borrower as the real value of the money being repaid decreases over time. On the contrary, in years where the mortgage interest rate exceeds the rate of inflation, it would typically be more advantageous to be the bank or the lender, as they receive payments that retain more of their real value.
Banks consider mortgage loans as assets because they represent a legal obligation for the borrower to make payments over time. The value of these loans is measured by what they could be sold for in the secondary loan market. This valuation reflects the current worth of future payments, discounted by various factors including interest rates and the risk of default.
Therefore, when analyzing Table 19.11 or any similar data, one must compare the listed mortgage interest rates against inflation rates for each year to determine in which years borrowers or lenders had the advantage. This comparison is critical for understanding the dynamics of lending, borrowing, and financial decision-making in the housing market.