If I borrow 200k from a bank or building society to buy a house in say 2018, why is the interest rate on that loan variable for the next 25 years? Shouldn’t it be the internet rate when the bank loans the money to me.
If the bank has loaned me money when interest rates are low, then interest rates go up, aren’t they just creaming off a whole load of profit from me?
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Your mortgage rate is based on the prime lending rate which is in turn based on the federal interest rate. As the federal interest rate changes so do all those other rates which can make your mortgage more or less expensive.
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