If the loan is fully paid and the borrower re-applies, the rate to be used will be the prevailing prime rate at the time of the 2nd loan release. Many banks offer both types of rates? Some only offer the variable rate, which is the safest for banks. What is the best? Any answer will be speculative. No one can predict the future. There are many factors to take into account: PREVAILING RATES, STATE OF THE ECONOMY, POLITICAL STABILITY. Unexpected events that cannot be predicted (like the WTC terrorist suicide attack or the pandemic) could push the interest rates up. If home mortgages rates drop to 7% per year, as it did in the US in the late 80s, it would be wise, for the home buyer, to lock in at that unusual low rate. For banks it is wiser to offer only the floating or variable rate. No bank wants to get stuck for 20 years at that very low interest rates. If this 7% rate is the variable rate, most banks would offer a fixed rate of 8.5% guaranteed for 20 years. In the 90s home mortgage rates in the US skyrocketed to the 15%-17% range. If you are buying a home in the US in the 90s and there are 2 rates: 15% fixed and 17% variable, what would you choose? QUESTION If you are buying a home in US in the 90's and there 2 rates: 15% fixed and 17% variable, what would you choose? Why