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In just a few words, explain why the same financial institution would quote its mortgage rates...

In just a few words, explain why the same financial institution would quote its mortgage rates as an APR and its certificates of deposit with an APY

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Answer #1

APY or EAR will always be more than APR, except in case of annual compounding. And both mortgage rates and certificates of deposit are compounded more frequently than annually. Hence, for both of them APY is more than APR. For a borrower, as in case of mortgage, seemingly lower rate would appear when APR is quoted and thus make it more attractive. Similarly, for a lender, as in case of certificates of deposit, seeingly higher rate would appear when APY is quoted and thus make it more attractive.

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