A historical scenario refers to using historical interest rates or movements of interest rates to depict how a current housing loan might adjust in the future.
This would undoubtedly only be demonstrated on mortgages that are on floating interest rates or variable interest rates.
For example, bankers love to illustrate to borrowers how their internal board rates have not changed for years. And then use that lack of movement to paint a pretty picture of how predictable the loan payments will be moving forward.
However, do note that historical scenarios are meant to help borrower understand how mortgages work.
They are not good indicators of how it will perform in future.
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