NARRAGANSETT — A low interest rate will save the town about $544,000 in the latest round of borrowing for the $21.5-million school building and renovation project.

The town had anticipate a rate of 5.5 percent, but the actual rate was 2.5 percent, said Town Manager Jeffry Ceasrine.

The saving comes on what are known as bond anticipation notes, which will cover the project’s costs on a short-term basis until the town sells 20-year bonds next year.

Had the town obtained a 5.5 percent interest rate, the interest expenses for the short-term notes would have been about $998,000, Ceasrine said. Instead, the costs will be about $454,000, he said.

Ceasrine said the town obtained a low rate partly because of market conditions and partly because of its healthy bond rating and its debt management plan.

The town also hopes to get a low rate next year when it sells the 20-year bonds, though rates are now higher for long-term borrowing than for short-term borrowing, Ceasrine said.

“Anything less than 5.5 is still good news for us,” he said.