What is the percentage rate at which interest accrues on a mortgage called?

The percentage rate at which interest accrues on a mortgage is known as the Annual Percentage Rate (APR). This term encompasses not only the interest rate but also includes additional costs or fees that may be associated with the mortgage, thus providing a more comprehensive view of the overall cost of borrowing.

Understanding this, the APR is crucial for borrowers as it allows for better comparison between different loan offers. For example, two loans may have the same nominal interest rate, but if one includes more fees than the other, the APR will reflect this, making it evident to the borrower which option is more economical over the life of the loan.

The term “Interest Accrual Rate” is not a standard designation used in mortgage lending, while “Mortgage Rate” typically refers specifically to the interest rate on the mortgage, excluding other costs. Additionally, “Fixed Rate” describes a type of mortgage in which the interest rate remains the same throughout the life of the loan but does not reflect the overall percentage at which interest accrues. Thus, the phrase Annual Percentage Rate accurately conveys the most comprehensive and useful information for borrowers regarding the cost of their mortgage.