Focus on Nominal and Real Interest Rates
This assignment provides instructions on building the graph below and includes writing prompts for out-of-class assignments.
Storytelling with Data and FRED Interactive Modules
Quiz Yourself on Interest Rates
Q1. Between January 1 and July 1, 2022, which average mortgage rates were higher: the 15-year fixed rate average or the 30-year fixed rate average?
Q2. Consider the fact that interest rates reflect the risk for the lender of not getting their money back promptly or in full. Why is the 30-year fixed rate mortgage average higher than the 15-year fixed rate mortgage average?
Q1. Between January 1 and July 1, 2022, which interest rates were higher: overnight unsecured or overnight secured?
Q2. Consider the fact that, sometimes, assets can be used to secure the repayment of a loan. Why is the overnight unsecured interest rate higher than the secured overnight interest rate?
The graph above shows mortgage interest rates charged to borrowers with low credit rating scores (less than 680) and high credit rating scores (greater than 740).
Q1. Between January 1 and July 1, 2022, which interest rates were higher: those charged to borrowers with high or low credit rating scores?
Q2. Why are borrowers’ credit rating scores related to the mortgage interest rates charged by lenders? A2. Because the borrowers’ credit rating scores are related to the risk for the lender of not getting their money back promptly or in full.
You can share these graphs with your students using this dashboard. To customize this dashboard, just click the “Save to My Account” button at the top of the dashboard.