Final answer:
The advantage of borrowing or lending can be determined by comparing mortgage interest rates to inflation rates. In years where inflation exceeds these rates, borrowers benefit, while lenders have the advantage when interest outpaces inflation. Specific data from provided tables are needed to determine the exact favorable years.
Step-by-step explanation:
When assessing the value of a mortgage loan from the perspective of both the borrower and the bank, we need to compare the mortgage interest rates to the rates of inflation for various years.
If the mortgage interest rate is higher than the rate of inflation, it typically means the real cost of borrowing is increasing; hence, those years are better for banks as lenders because they receive more in real payment terms.
Conversely, when the rate of inflation is higher than the mortgage interest rate, it is generally more advantageous for borrowers because the real cost of borrowing is lower due to the decrease in the purchasing power of money over time.
Subprime loans carry additional risks, as they are offered to individuals with lower credit ratings and feature higher interest rates, often adjustable, to compensate for the bank's increased risk of default.
A bank might sell such loans on the secondary loan market to mitigate these risks, which can affect incentives for careful lending practices.
The years in which it would have been better to be a borrower or a lender depend on specific data from Table 6.11 or Table 19.11, which lists mortgage interest rates and inflation rates for various years. Without this data, we cannot definitively say which years would favor borrowers or lenders.