When you take out a mortgage or other type of loan, your lender will charge a percentage of the loan as a fee for borrowing its money. The interest rate adds to the total balance of your loan; typically, you must pay at least the interest on your loan each month. Prevailing interest rates affect how much you can afford to borrow: if interest rates are high, you may not be able to buy an expensive property. High interest rates also can cause the value of any property you own to stagnate or fall. Understanding prevailing interest rates can help you to assess loans more effectively.
The amount of interest that you pay as a borrower depends on whether the interest rate is variable or fixed.
While the banking industry can change the prevailing rate for mortgages and other loans, interest rates for mortgages and other loans depend on forces other than the banking industry. For instance:
Last updated Nov. 20, 2018
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