[honeydiva33]

fixed rate mortgages favorable to lenders & borrowers?

[sonjon]

ADJUSTABLE: Usually favorable to a borrower because the initial interest rate is lower than the current day rate on most other products...it can be the difference between being able to buy now or having to wait (much of the subprime mortgage mess centered upon adjustable rate mortgage products...they CAN be risky). Favorable to a lender because it brings in another customer who may not otherwise borrow, and provides them with a marketable loan to sell on the secondary loan market. Obviously, they would also find it favorable if you were paying more interest in the future.FIXED: Advantageous to borrowers because the rate/payment can be depended upon for the entire term of the loan (allows for accurate budgeting, etc.). Advantageous to lenders for much the same reason...steady payment. In theory, the longer into the loan term the better able the borrower will be to repay (house payment stays the same while income may rise). Most people want fixed rate loans, so it stands to reason that a lender would favor offering them in an effort to appeal to more potential borrowers as well.Hope this helps!