I'm on the cusp of signing a 30-year fixed mortgage at 3.8% interest (I might even be able to negotiate it down to 3.6%).
Looking at historical interest rates, it's a dead-certainty that interest rates will rise over the next 30 years, in all liklihood way above 6-7% through the life of the mortgage, possibly even higher (thinking of the 16% in the early-1980s). There's also speculation it will rise.
A lawyer friend of mine suggested I get an ARM instead (and qualify for a 3.1% interest rate for 7 years) and said that if interest rates increase to something seriously unprofitable for the bank (above 8%) the bank might invoke some force majeure clause or other trick to nullify the contract and raise the interest rate.
Is there any truth behind my friend's remarks? Obviously I'll ensure that the contract is watertight in my favour, but his piece leaves me a bit rattled.