Mortgages: Is there a conflict of interest for my bank?

Many banks’ core business activities include the interest margin business. This means that banks invest their customers’ short-term deposits over the long term, for example in fixed-rate mortgages. Because the money in these mortgages is tied up for a far longer period of time, banks can demand a higher interest rate than the rate they pay on savers’ deposits. That is why many recommend medium- to long-term fixed-rate mortgages despite there being more cost-effective models available to customers.