Teaser rates on variable mortgage products looked great at the beginning. Borrowers are starting to come out from the affect of the ether and waking up to a rate that is in some cases DOUBLE from where they started. A lender would offer ?% to 1.0% below Prime rate (currently just increased to 8.25%) for say the first six months then go up to say just Prime. There were multiple combinations offered to attract the borrowing public.

Simply, depending on credit score and loan to value of the property, a borrower could just go and convert the HELOC to a fixed rate and stop the roller coaster ride. The rate will be a little higher but the uncertainty will be gone. The current blended rate per this example is: $200,000 x 6.25% = $12,500 for the first and $70,000 x 8.25% = $5,775 for total annual interest of $12,500 + $5,775 = $18,275 divided by the total outstanding debt of $200,000 + $70,000 = $270,000 is $18,275/$270,000 = 6.7685% as a simple interest blended rate at this moment.