What type of mortgage loan typically has the highest interest rates?

Subprime mortgages typically carry the highest interest rates due to the elevated risk they pose to lenders. These loans are designed for borrowers with poor credit histories or limited financial means, which makes them more likely to default on their loan obligations. As a result, lenders charge higher interest rates to compensate for this additional risk, ensuring they can cover potential losses.

In contrast, fixed-rate mortgages and adjustable-rate mortgages generally involve borrowers with better credit profiles or stable financial histories, leading to more competitive rates. Interest-only mortgages allow borrowers to pay only the interest for a set period, but they may not inherently be the highest in terms of interest rates compared to subprime loans. Consequently, while other loan types may have varying rates based on market conditions and borrower qualifications, subprime mortgages inherently carry higher rates as a risk management strategy.