for the lender it means that the US mortgage contract is highly one-sided. During a period of rising rates their fixed-rate loans will devalue. During a loosening of monetary policy, when rates fall, the borrowers refinance. Lending for thirty-year terms at fixed rates is a viable business proposition only under the kinds of conditions of stability that prevailed under Bretton Woods between 1945 and 1971. In a new age of flexible monetary arrangements it was dangerously one-sided, especially if the risks were concentrated in small mortgage lenders with limited means of funding themselves.
