Answer 5. If the economy slips into a recession next
year, it is likely that the Federal Reserve will increase the money supply.
According to the IS/LM curves, this increase in money supply will result in a
lower interest rate next year. Therefore, you should prefer a flexible interest
rate so that when market interest rates fall next year, your mortgage interest
rate will go down as well. That’s the good news. The even better news is that
you can convert your flexible rate mortgage into a fixed low rate mortgage next
year when interest rates will be lower.