For many people, buying a home is the largest financial transaction of their lives, and one of the most important decisions is choosing the right type of mortgage. One of the options that borrowers have is a fixed-rate mortgage, which offers the security of a fixed monthly payment over the life of the loan. However, locking in a fixed-rate mortgage during a high-interest rate market comes with significant risks.

When interest rates are high, the banks are trying to lock that in for as long of a term as they can. This means that borrowers will have to pay more in interest over the life of their term. This risk can make it more difficult for borrowers to afford their monthly payments and can lead to financial stress and even default. If interest rates fall after a borrower has locked in a fixed rate, they will not be able to take advantage of the lower rates unless they refinance their mortgage, which can be costly.

Another risk of locking in a fixed-rate mortgage during a high-interest rate market is that it can limit a borrower’s flexibility. If a borrower’s financial situation changes, such as a job loss or unexpected expense, they may find it difficult to make their mortgage payments. If they are locked into a fixed rate, they will not be able to reduce their monthly payment by extending the term of the loan or changing to a variable rate.

While fixed-rate mortgages offer the security of a fixed monthly payment, locking in a fixed rate during a high-interest rate market comes with significant risks. Borrowers may end up paying more in interest over the life of the loan, have limited flexibility if their financial situation changes, and may have fewer options when it comes to selecting a lender or a mortgage product.

When it comes to making a decision, trust your professional mortgage broker for advice. Since no two people are the same, each individual scenario needs to be viewed in its own way. This is where talking to a broker will help give you the answers you need in order to make the correct decision.