>>>>I always go with a fixed rate. I like the guarantee that the payment will always remain the same.
>>>
>>>Ok. Your adjustable rate mortgage sounds like a completely different animal than our variable rate mortgage. See my note to Dorris.
>>
>>I don't think it's different at all. It's just being misdescribed.
>
>So the rate doesn't escalate over the life of the mortgage? Is it like ours; just floats based on the prime rate? If so, then the idea that only fools would take such a mortgage is a bit silly. I don't know if I'd take a 25 year mortgage and choose variable rate for the life of the mortgage, but in 3 to 5 year terms, it's quite workable moving from one form to the other depending on where one thinks the prime rate will be going. All I can say is that it worked out beautifully for me.

Over the long run and over a wide enough spread of customers it will make no difference to the bank. They will gain/lose on one while gaining/losing on another and vice-versa. Sometimes customers will win and sometimes they will lose. Overall the banks will make money - except when too many customers default. When that happens I think the banks have failed to properly evaluate the risks involved in their lending practices. When they on-sell those risks to investment companies (and others) then those investment companies have failed to properly evaluate the risk involved in buying those securities. But thats another discussion :)