[tukantje]

Here is how I hear it personally; When interest rates rise, demand for other assets go down, which would include these mortgage bonds; which means it is now cheaper to buy your mortgage out due to reduced demand. Essentially your mortgage is now dynamically priced, in terms of extinguishing it; by the market. If so - sounds brilliant actually.

Especially because this would correctly price the change in time value of money changes - without such a system, people are incentivised to pay as slowly as possible when the interest rate on their loan is lower than the central bank rate.