Most banks offer a fixed rate for an x number of years while you pay your mortage in 30 years.

The lower x is, the lower the interest you pay during those years.

For example, banks can offer the following loans: - 20 year fixed rate at 1.30% - 30 year fixed rate at 1.42%

So there is a possibility to gamble with the interest rates while still having a "fixed" rate.

I presume fixed rate on real estate loans. You take 25 year mortgage, while having first 10 years fixed because its so cheap. You as a buyer hope desperately super low interest rates will still remain after those 10 years. If not, many people will be royally screwed since their monthly payments can easily double/triple.

Ie in Switzerland with their specific mortgages, it can easily go from USD 800 to USD 8000 per month if things go south, with drop in prices matching this development.

The American system where you have a fixed rate for the entire length of the loan is an oddity worldwide, and largely created by post-WW2 housing policy. In most other countries all mortgages are variations on what we'd call ARMs in the U.S: you get a fixed rate for a certain term and then it resets periodically afterwards.

Here is Australia mortgages are typically for 30 years but it would be unusual to fix your mortgage for more than 5 years. Once you reach the end of your first fixed period you can re-fix at whatever the market rates are at the time.

You generally have the option of setting the fixed rate for a lesser period of time in exchange for a discount. At least that’s how it worked in Japan.

So

Floating rate: 0.7%

1 year fixed rate: 0.9%

5 year fixed rate: 1.2%

10 year fixed rate: 1.4%

35 year fixed rate: 1.6%

> If the rate is set to change at some point, you can't really call it a fixed rate, can you? Hence, fixed versus variable.

Fixed rate mortage has fixed percentage for an agreed period of time (fixation duration). Variable rate mortgage is based on current inter-bank market rate (or some other index), e.g. EURIBOR + X %.

The loans have fixed interest rates for 10 or 15 years. You refinance after. So the tears come with a delay.