Which of the following best describes a fixed-rate mortgage?

A fixed-rate mortgage is characterized by having an interest rate that remains constant throughout the duration of the loan. This means that regardless of fluctuations in the broader market or changes in interest rates, the borrower’s rate will not increase or decrease during the life of the mortgage. This stability allows borrowers to plan their monthly payments with certainty, knowing exactly how much they will owe each month without any surprises.

This structure is particularly beneficial in a volatile financial environment, as it provides a hedge against rising interest rates. Borrowers can lock in the current rate, ensuring that their mortgage remains manageable even if broader interest rates rise in the future.

Other elements often associated with fixed-rate mortgages, such as the size of the down payment, are not defining characteristics of this type of loan, which is why options suggesting that it requires a large down payment or is limited to short-term loans do not sufficiently describe a fixed-rate mortgage. Additionally, the nature of its interest rate distinguishes it clearly from variable-rate products.