When is a borrower likely to float their interest rate?

A borrower is likely to float their interest rate when they expect rates to decrease. This strategy enables them to benefit from potentially lower rates before locking in a loan. By floating the rate, the borrower remains flexible and can monitor market trends, aligning their decision to secure a loan at the most advantageous time. It reflects a strategic approach to taking advantage of anticipated favorable market movements, which can lead to significant savings over the life of the loan.

In this context, borrowers who believe rates will increase are more inclined to lock in their rates immediately to avoid the higher costs associated with rising rates. Similarly, securing a fixed rate is typically associated with locking, which guarantees a specific rate for the term of the loan, rather than floating it. Lastly, if borrowers are satisfied with current terms, it suggests they would likely secure those terms rather than float, as they see no advantage in waiting.