how fixed interest rates work
a fixed interest rate is attractive to borrowers who don t want their interest rates fluctuating over the term of their loans potentially increasing their interest expenses and by extension their mortgage payments this type of rate avoids the risk that comes with a floating or variable interest rate in which the rate payable on a debt obligation can vary depending on a benchmark interest rate or index sometimes unexpectedly 1borrowers are more likely to opt for fixed interest rates when the interest rate environment is low when locking in the rate is particularly beneficial the opportunity cost is still much less than during periods of high interest rates if interest rates end up going lower fixed rates are typically higher than adjustable rates loans with adjustable or variable rates usually offer lower introductory or teaser rates than fixed rate loans making these loans more appealing than fixed rate loans when interest rates are high the consumer financial protection bureau cfpb provides a range of interest rates borrowers can expect at any given time depending on their location the rates are updated biweekly and consumers can input information such as their credit score down payment and loan type to get a closer idea of what fixed interest rate they might pay at any given time and weigh this against an adjustable rate mortgage arm the interest rate on a fixed rate loan remains the same during the life of the loan because the borrower s payments stay the same it s easier to budget for the future 