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.
If the first few years were manageable, experience showed that there was no reason to be concerned for the long term. The situation today is entirely different. The economy has been stable since the end of the 1980s and there is a general faith that reasonably low inflation and equivalently low interest rates will dominate for years to come.