Mortgage Definition
Interest Rate
The percentage charged by a lender for borrowing money. Mortgage rates can be fixed (same rate for the life of the loan) or adjustable (can change over time).
Why it matters
This term influences how sensitive your payment is to rate shifts and fee structure. Understanding it helps you compare lender quotes beyond the headline interest rate.
Interest Rate vs. Fed Funds Rate (Not the Same Thing)
- Mortgage interest rate: the rate used to price your home loan payment.
- Fed funds rate: a short-term policy rate targeted by the Federal Reserve.
- Why people confuse them: Fed decisions can influence expectations, which then affect bond yields and mortgage pricing.
Why mortgage rates can move before Fed meetings
Markets often reprice ahead of a Federal Reserve meeting as investors update expectations for inflation, jobs data, and policy guidance. That means mortgage rates may move before the actual Fed decision date.
Use Fed Funds Rate, Mortgage Rates Today, the Jobs Report Release Date guide, and the Mortgage Rates topic hub together when comparing quotes.
Related terms
Related tools
- Mortgage Calculator
Estimate principal, interest, taxes, insurance, and PMI in one payment view.
- Affordability Calculator
Validate your target budget and debt-to-income range before making offers.
- Closing Costs Calculator
Estimate cash-to-close so you can compare monthly and upfront costs together.
- Mortgage Rates Today
Follow lock-vs-wait context and scenario planning when rates are moving.
Run your scenario
Apply this definition to your own numbers with our calculator suite.