The rate of interest charged on the re-payment of a loan during the duration of the re-payment. See note rate. Example:
Fixed Rate Mortgage at 8%: Contract Rate = 8%; Contract Rate = Note Rate.
Fixed Rate Buydown (10% to 7%): Contract Rate = 10%. Rate for 1st year = 7% (note rate), 2nd year = 8%, 3rd year = 9%, 4th year and duration of loan = 10% (contract rate).
Adjustable Rate Mortgage (6.5%): Contract Rate starts at 6.5%, may vary at specified periods throughout the term of the loan. Note Rate - 6.5%