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Interest rates

Fixced or variable, historically variable wins because banks make money by avoiding risk. If the bank sees rates coming down they make the fixed rate attractive to entice people to lock in.

The bank is guaranteed to make money on a variable rate so the margin can be lower.

The mortgage business fuels economic growth because banks are allowed to lend out more money than they take in. The system works when most people pay on time. Too many loans go into default and the bank will be unable to meet withdrawals.

Painful irony after the sub prime meltdown is that none of the banks that bought "securities" would have lent money to the people who's mortgages they ended up holding. The buyers relied on bond ratings which were misleading to say the least and most were outright fraudulent.

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