The passion for home loans
Banks expect that at some point the prime interest rate will rise higher than your fixed rate mortgage's interest rate and the bank will be forced to pay the shortfall out of its own pocket. To cover for this eventuality, banks set the interest for fixed rate mortgage loans higher than that for adjustable rate mortgages. A convertible home mortgage loan initially has an adjustable rate, but can be converted to a fixed rate during a certain period of the loan's term. This is a good type of loan to choose if interest rates are high but are expected to drop. You can take advantage of the lower interest rate of an adjustable rate home mortgage when interest rates are high, then lock in a better interest rate for the life of the loan as soon as rates drop.