Why did this take place at a time when the level of interest rates was historically low? In retrospect, one can see that borrowers should have taken loans at variable rates when interest rates were very high, e.g. in the early 1980s.
At that time mortgages were financed predominantly with  2  BIS Review 24/2002  fixed-rate loans because the economic situation was perceived as far more uncertain. Inflation was high and fluctuating, and interest rates had risen significantly. In an uncertain economic world borrowers’ primary need was to be certain of the level of their future mortgage costs.