The tilt problem causes the real payment on a fixed rate mortgage to be:

Question

Quizplus · Accepted Answer

The tilt problem refers to the effect of inflation on the real value of fixed mortgage payments over time. At the beginning of the mortgage term, when the payments are made in current dollars, their real value is high due to the purchasing power of money being greater. As time progresses and inflation occurs, the real value of the same nominal payment decreases, making the real payment low at the end of the mortgage term.

The Tilt Problem Causes the Real Payment on a Fixed