when homebuyers borrow money to purchase houses there may be an ird 
for example say a homebuyer purchased a home and took out a mortgage at a rate of 5 50 for 30 years assume 25 years have passed and the borrower only has five years left in the mortgage term the lender could use the current market interest rate it is offering for a five year mortgage to determine the ird if the current market interest rate on a five year mortgage is 3 85 the ird is 1 65 or 0 1375 per month 4interest rate differential ird vs net interest rate differential nird the net interest rate differential nird is a specific type of ird used in forex markets in international currency markets the nird is the difference between the interest rates of two distinct economic regions for instance if a trader is long the nzd usd pair they would own the new zealand currency and borrow the us currency these new zealand dollars can be placed into a new zealand bank while simultaneously taking out a loan for the same amount from the u s bank the nird is the difference in any interest earned and any interest paid while holding the currency pair position 