Which of the following is an example of a fixed-rate mortgage?

A fixed-rate mortgage is characterized by an interest rate that remains constant regardless of external market conditions. This stability allows borrowers to predict their monthly payments over the life of the loan, typically ranging from 15 to 30 years. This predictability is particularly advantageous in a fluctuating interest rate environment, as it protects the borrower from potential increases in rates over time.

In contrast, the other options describe different types of mortgage structures that include variable interest rates. Interest rates that fluctuate based on a market index can lead to different monthly payments, creating unpredictability for the borrower. Similarly, short-term loans with variable interest rates and loans that adjust their rates annually do not provide the same consistency as a fixed-rate mortgage, which can make budgeting more challenging for homeowners. By sticking with a fixed-rate mortgage, borrowers can avoid the potential stress of rising payments and have a clearer understanding of their long-term financial commitments.