What type of mortgage typically has the lowest interest rate?

The answer is that a fixed-rate mortgage typically has the lowest interest rate compared to the other options. A fixed-rate mortgage offers a consistent interest rate over the life of the loan, ensuring stability in monthly payments. This predictability is appealing to many borrowers, especially in lower interest rate environments.

In general, interest rates for fixed-rate mortgages tend to be more competitive because they reflect the longer-term lending commitment by lenders. Unlike adjustable-rate mortgages (ARMs), which can fluctuate based on market conditions and may start with a lower initial rate that can increase over time, fixed-rate loans provide a safeguard against rising interest rates.

Home equity lines of credit (HELOCs) are usually variable interest loans that can start with lower rates but can increase significantly if interest rates rise, making them less stable over time. Second mortgages may also come with higher rates due to the increased risk they pose to lenders, who are in a subordinate position to the primary mortgage lender in the event of a default.

Thus, the stability and favorable terms typically associated with fixed-rate mortgages make them the option most likely to have the lowest interest rate in a stable or decreasing interest rate environment.