fixed-rate mortgage investment & finance definition

A home loan in which the interest rate remains unchanged throughout the life of the loan. This results in a constant payment that won’t rise during the life of the mortgage even if interest rates rise. During the early years of a fixed-rate mortgage, most of the monthly payment goes to pay interest on the loan and only a small portion goes to pay down the principal. This situation reverses itself toward the end of the mortgage term. In contrast, an adjustable-rate mortgage has an interest rate that can increase or decrease depending on market interest rates.