Mortgage Rates

What Is a Mortgage Rate?

Mortgage rates refer to the interest rates charged by lenders on mortgage loans. A mortgage is a loan taken out to finance the purchase of a property, such as a house, townhome or condominium. The mortgage rate is the percentage of interest that the borrower pays on top of the principal amount borrowed.

Mortgage rates can be fixed or adjustable. A fixed-rate mortgage has an interest rate that remains constant throughout the loan term, typically ranging from 15 to 30 years. This means that the borrower's monthly mortgage payments stay the same over the life of the loan.

On the other hand, an adjustable-rate mortgage (ARM) has an interest rate that can change periodically. The initial rate is often lower than that of a fixed-rate mortgage but can increase or decrease over time based on market conditions and the terms of the loan. This means that the borrower's monthly payments may change over the course of the loan.

Mortgage rates are influenced by various factors, including economic conditions, inflation rates, central bank policies, market forces, and the borrower's creditworthiness. Lenders will determine mortgage rates based on these factors and the perceived risk associated with lending to each particular borrower.

It's important to shop around and compare mortgage rates from different lenders to find the best deal that suits your financial situation and long-term goals.