Which type of interest rate changes over time based on market conditions?

The type of interest rate that changes over time based on market conditions is known as a variable rate. This rate is typically tied to a benchmark interest rate, such as the prime rate or LIBOR, and can fluctuate at predetermined intervals, depending on the movements in those benchmarks. This characteristic allows the borrower's payment amounts to vary, which can be beneficial in a declining interest rate environment, as it can lead to lower payments over time.

In contrast, a fixed-rate interest remains constant throughout the term of the loan, providing predictable payments but not benefiting from potential decreases in market rates. Temporary rates, while they may apply for a short period, do not necessarily adjust based on market conditions in the same way a variable rate does. Amortizing rates refer to a repayment structure where loan payments are spread out over time, rather than being an interest type itself, and this structure can be applied to both fixed and variable rates. Thus, the concept of adjusting based on market conditions clearly identifies the variable rate as the correct answer.