 Sam
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 Posted: Fri Apr 09, 2004 3:26 am Post subject: Percentage Point |
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Percentage points are utilized to describe the variation in interest rates or inflation rates. For instance, when the interest rate moves up from 6% to 8%, it is said to have increased by 2 percentage points.
Mortgage rates vary with respect to increase or decrease of the percentage points. For most long term fixed rate mortgages, each discount point reduces the interest rate by 0.125 of a percentage point. But there are other fixed rate loans where the interest rate is reduced by 0.250% of a percentage point. For most adjustable rate mortgages, the interest rate is lowered by 0.375% of the percentage point for every discount point paid by the borrower.
Often Percentage points are simply referred as "Points". One hundredth of a percentage point is known as basis point.
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