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Residential mortgage loans are made (originated) in primary markets where lenders and borrowers conduct business.
Borrowers get mortgage credit in these markets mainly from depository institutions or mortgage banking companies. Since the 1930s, mortgage loans made in primary markets typically have been long-term, fixed-rate instruments with level payments that pay off (amortize) the principal balance over the term of the loan. However, new types of mortgage instruments emerged recently to serve the various needs of borrowers and investors.

Historically, 30-year fixed-rate mortgages have been the loan instrument of choice for many borrowers.
The changing conditions in the mortgage market, however, coupled with sharp fluctuations in interest rates, have increased the demand for shorter maturities, more interest-sensitive loans, and nontraditional mortgage instruments.
Borrowers that opt for fixed-rate loans anticipate stable or increasing interest rates. If they are wrong, they can refinance later.