The best thinking about mortgage rates
Whatever rate you pay at the start of the loan, that is the exact same rate you pay until the end of the loan. You pay a premium for the certainty of a fixed payment since lenders usually charge slightly higher interest rates for a fixed rate home mortgage. Adjustable rate mortgages, on the other hand, have an interest rate that rises and falls usually with the prime rate. Your interest rate and mortgage payments are higher when national interest rates are higher, and drop when national interest rates fall. Because this kind of mortgage is less risky for banks, they set the interest rates for adjustable rate mortgages slightly lower than they do for fixed rate mortgages.