What defines a fixed rate mortgage?

A fixed rate mortgage is characterized by having an interest rate that is determined at the outset and remains consistent throughout the entire term of the loan. This stability allows borrowers to have predictable monthly payments, which can aid in financial planning and budgeting.

When the interest rate is fixed, it is immune to fluctuations in the market, meaning it won't change regardless of economic conditions that may affect interest rates over time. This is particularly advantageous in rising interest rate environments, as borrowers are protected from increases that would apply to variable rate loans. A fixed rate mortgage offers a level of security and assurance to homeowners and investors that their borrowing costs will not escalate unexpectedly.

Other features associated with fixed rate mortgages typically include consistent monthly payments that cover both principal and interest, making it easier for borrowers to manage their payments without the stress of potential increases due to market volatility.