Honeymoon Rates

A honeymoon rate is a discounted initial rate designed to make loan offers more attractive to borrowers. Honeymoon rates are usually offered for a brief introductory period, typically the first 6 to 12 months of the loan term. The discount may be offered as a capped, adjustable or fixed rate. After the honeymoon period, the loan reverts to the original rate offered by the lender. Lenders often advertise honeymoon rates up to two percentage points below the standard, but they are also required to advertise the comparison rate to keep from misleading borrowers.