What is the average mortgage rate as calculated from Gail’s two mortgages?

To determine the average mortgage rate from the two mortgages held by Gail, you would first need to know the individual rates of those mortgages and the outstanding balances. The average mortgage rate is typically calculated by weighting each rate according to the balance of the mortgage.

In this scenario, if the correct answer is presented as 5.5%, it suggests that when averaging out the rates considering the amounts of each mortgage, the resulting average aligns with this value. This calculation would account for how much each mortgage contributes to the total, providing a more accurate representation of Gail's overall mortgage costs.

In practice, if you have two mortgages with rates of, for example, 5% and 6%, and their respective balances, you would multiply each interest rate by the outstanding balance of that mortgage, sum those values, and then divide by the total of the outstanding balances. If performed accurately, this process yields an average mortgage rate that reflects the actual financial impact on Gail based on her two mortgages.

Therefore, a final average rate of 5.5% indicates that, after the appropriate calculations, this rate represents the effective cost of borrowing for both loans combined.