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    For a lender, the cost of funding is related to an index. Therefore, based on this index and the changing interest rate, payments made by the borrower fluctuate over time. Unlike a fixed rate mortgage, and adjustable rate transfers a large amount of the risk into the hands of the borrower. Obviously, to prevent problems with asset-liability mismatches, banking regulators place tight restrictions on their long-term fixed-rate mortgages. This greatly reduces t

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