What is a 'Fixed Interest Rate'
A fixed interest rate is an interest rate on a liability, such as a loan or mortgage, that remains fixed either for the entire term of the loan or for part of this term. A fixed interest rate may be attractive to a borrower who feels that the interest rate might rise over the term of the loan, which would increase his or her interest expense. A fixed interest rate, therefore, avoids the interest rate risk that comes with a floating or variable interest rate, wherein the interest rate payable on a debt obligation depends on a benchmark interest rate or index.
BREAKING DOWN 'Fixed Interest Rate'
While a home buyer in the United States can obtain a mortgage with a fixed interest rate for the full 30year term of his or her mortgage, in Canada, a home buyer can only "lock in" or obtain a fixed interest rate for a maximum of five to seven years of a 25year mortgage.
Borrowers are more likely to opt for fixed interest rates during periods of low interest rates, since the opportunity cost, if interest rates go lower, is still much less than during periods of high interest rates.

Variable Rate Mortgage
A type of home loan in which the interest rate is not fixed. ... 
Interest Rate Ceiling
The maximum interest rate that a financial institution can charge ... 
Floating Interest Rate
An interest rate that is allowed to move up and down with the ... 
Variable Interest Rate
An interest rate on a loan or security that fluctuates over time, ... 
Interest Rate Gap
The difference between fixed rate liabilities and fixed rate ... 
Hybrid ARM
A hybrid adjustablerate mortgage blends the characteristics ...

Investing
Understanding Term Loans
A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate. 
Personal Finance
Mortgages: Fixed Rate Versus Adjustable Rate
Choosing the right mortgage can help homebuyers avoid costly mistakes. Learn the difference between fixed and adjustablerate loans. 
Trading
Managing Interest Rate Risk
Interest rate risk stems from the possibility that an interestbearing assetâ€™s value will change due to changing interest rates. 
Personal Finance
Buying a House Before an Interest Rate Hike
Find out how a Fed rate hike would impact aspiring homebuyers, why rates increase, and whether now is the right time to buy a house. 
Markets
How Interest Rates Work On A Mortgage
A stepbystep explanation of the interest calculations, mortgage types, and how the loan is eventually "retired" â€“ which means paid off. 
Personal Finance
Understanding HomeEquity Loan Rates
Shopping is the most important part of getting a homeequity loan. You're going to have to live with the terms for a long time. 
Personal Finance
How Interest Rates Affect the Housing Market
Understand how rate changes can affect home prices and learn how you can keep up. 
Markets
Effect of Fed Fund Rate Hikes on the Housing Market
Understand what drives the federal funds rate and why the Fed would increase that rate. Learn about the effect of a rate increase on the housing market. 
Personal Finance
Mortgages: FixedRate Versus AdjustableRate
Both of these have advantages and disadvantages depending on your financial needs and prospects. 
Markets
Forces Behind Interest Rates
Interest is a cost for one party, and income for another. Regardless of the perspective, interest rates are always changing.

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