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What is an interest rate?

Posted by jt on May 3, 2019
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Disclaimer: This article is translated from ¿Qué es y para qué sirve una tasa de interés? by Capitalizarme.

Interest rate is related with loan payment. It is usually monthly or annual.

There are 3 types of interest rates for mortgage.

  • Variable rate: The rate changes each month according to a variable factor. It is the least used.
  • Fixed rate: The rate is fixed during the whole payment period.
  • Mixed rate: The rate is fixed during the first year and flexible from the second year on.  

In March, interest rates of consumer loans and foreign trade have decreased to 21.0% and 3.8% respectively from february’s 22.1% and 4.0%. Meanwhile, interest rates of commercial loans and mortgage stayed flat: 6.8% and 3.2%.

Chile has raised its interest rates by 0.25% from an annual 2.75% to 3%. Interest rates are one of the most important economic tools used by central banks to implement their monetary policies.

Raising interest rates can help curb inflation and protect currency. This is the first change since Central Bank increased interest rates by 0.25% to 2.75% on October 19, 2018.

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