I get a lot of excited questions based on information people see on the latest “average interest rate” news. This data is usually published monthly by the media, so it is a regular source of misleading data.

The average interest rate is a compilation of a lot of different interest rate quotes and variables, that do not apply to everyone’s exact situation. The average interest rate is a national average figure, with interest rate quotes from across the country that may not apply locally, and many times also includes interest rate quotes with points. But most consumers do loans with 0 points. Hence, the “average interest rate” you see on TV or in the newspaper always looks artificially low. Read the rest of this entry »