In the context of mortgages, what is meant by 'fixed-rate'?

In the context of mortgages, 'fixed-rate' refers to a type of loan where the interest rate remains consistent for the entire duration of the loan term. This stability allows borrowers to anticipate their monthly mortgage payments, as they will not fluctuate over time regardless of changes in market interest rates. This predictability is one of the key benefits of fixed-rate mortgages, making them popular among homeowners who prefer stable and manageable financial planning.

Understanding that the interest rate does not change helps borrowers avoid the risks associated with fluctuating payments, which can occur with other types of mortgages, such as adjustable-rate mortgages. These adjustable options may start with a lower initial rate but can increase over time, leading to varying monthly payments. Additionally, fixed-rate mortgages are not confined to short-term loans, as they can be long-term options that provide security throughout the entire life of the mortgage.