Final answer:
A home mortgage is commonly borrowed for either 15 years or 30 years, with 20-30 years being the most appropriate answer for the provided options. When deciding the best time to borrow or lend, the comparison between interest rates and inflation is crucial. For adjustable-rate mortgages, falling inflation generally leads to a decrease in interest rates, favoring the borrower. The correct option is D.
Step-by-step explanation:
A home mortgage is usually borrowed for a long period due to the significant amount of money involved in purchasing a home. The typical terms for a mortgage are either 15 years or 30 years. When analyzing the timing for borrowing or lending money, one must consider the interest rates and the rate of inflation.
In years where the mortgage interest rate is lower than the rate of inflation, it is generally better for a person to be borrowing money to buy a home because the real cost of borrowing is lower. Conversely, when the interest rate is higher than the rate of inflation, it is often more advantageous for banks to be lending money.
Regarding adjustable-rate mortgages (ARMs), if inflation falls unexpectedly by 3%, a homeowner with an ARM would likely benefit because the interest rate on their mortgage might decrease, making their payments less expensive in real terms over time.
Hence, Option D is correct.