What best determines whether a borrower’s interest rate on an adjustable rate loan goes up or down?
a fixed interest rate
a bank’s finances
a market’s condition
a person’s finances
What best determines whether a borrower’s interest rate on an adjustable rate loan goes up or down?
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The best answer is a market’s condition.
Explanation: The interest rates on adjustable rate loans (ARMs) are typically tied to market indexes. When these market conditions fluctuate, they affect the overall interest rates which in turn determine whether a borrower’s rate will increase or decrease. Factors like inflation, economic growth, and changes in the Federal Reserve’s policy can all influence market conditions.