What is Celine's interest rate for her mortgage?

To determine Celine's interest rate for her mortgage, it's important to focus on the context of the interest rates and their compounding methods. The correct answer, 6.55% compounded semi-annually, represents a common rate that can be expected for mortgages, especially in today's economic environment where rates can fluctuate based on various market conditions.

Compounding interest is a critical aspect to consider when comparing these rates. Semi-annual compounding means the interest is calculated and added to the principal twice a year. This can lead to a more favorable outcome for borrowers since the interest can start earning interest sooner compared to other compounding periods, like annually or quarterly.

Given this context, 6.55% compounded semi-annually suggests a blend of a competitive interest rate with a compounding method that can be beneficial for monthly payment calculations, leading to a plausible choice for Celine’s mortgage. The importance of understanding not just the interest rate itself, but how often that interest is compounded, cannot be overstated. It directly affects the total amount payable over the life of the loan.