Can the borrower be “worse off” because it Linked its mortgage?
Yes. A borrower under an Index Mortgage can be “worse off” than it would have been under an equivalent non-indexed mortgage. This because there is no guarantee that, even over the long-term, the Link will outperform the standard mortgage rate. But there is every reason to believe that it will. So, the question really ought to be: What is the chance that the borrower will be worse off? If that chance comes to pass, how much worse off might the borrower be? What