An ARM is an Adjustable Rate Mortgage. Unlike fixed rate mortgages that have an interest rate that remains the same for the life of the loan, the interest rate on an ARM will change periodically.
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Interest rate is the amount of interest you will be paid on the balance of your loan each year.
This has an impact on your monthly mortgage payments.
The comparison rate combines the interest rate with the majority of the loan's fees and charges.
This is intended to assist you in determining the loan's cost more precisely and making product comparisons easier.
If you want to know more about the difference between the interest rate and the comparison rate, please contact the North Brisbane Home Loans team.
Let us therefore analyse what we need to pay attention to, if we want to invest money in bonds.
Bond prices and interest rates tend to move in the opposite direction.
An increase in the interest rate usually leads to a fall in the market price of the bonds.
Investors interested in buying bonds in the event of an interest rate increase in the market will want to dispose of their bonds as soon as possible, since newly issued bonds offer a better rate of return - an increased supply of bonds will lead to a decline in their market value.
In turn, the opposite situation, i. e. a decrease in interest rates, will lead to an increase in the price of bonds, as investors will be interested in buying such bonds because their yield is higher than those currently issued.
In this case, interest rate changes do not affect the price of the bonds or the impact of their changes is very limited.