Fixed interest rate - Financial definition
Concise definition of the term fixed interest rate
A fixed interest rate is a predetermined rate that remains unchanged for the duration of a financial agreement, such as a loan or bond.
Comprehensive definition of the term fixed interest rate
Fixed interest rates provide borrowers and lenders with predictability and stability, shielding them from fluctuations in market interest rates. For example, a fixed-rate mortgage ensures that the borrower's monthly payments remain constant over the loan term, regardless of changes in the broader economy. This stability can be advantageous during periods of economic uncertainty or rising interest rates, offering peace of mind to both parties involved in the financial transaction.