Except that fixed term mortgages have the option to prepay - so people in the US signing 30yr fixed mortgages are locking in a fixed ceiling for the duration of

Except that fixed term mortgages have the option to prepay - so people in the US signing 30yr fixed mortgages are locking in a fixed ceiling for the duration of their mortgage, and if mortgage rates come down in a couple of years, they just refinance the whole thing, but they pay a spread over an ARM for this option. For some people it’s more prudent to pay a few hundred extra basis points over the next several years, than risk their mortgage resetting at a higher rate, and having the option of refinancing at a lower rate…they’re purchasing insurance…