Adjustable rate

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Adjustable rate

Applies mainly to convertible securities. Refers to interest rate or <> that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. Typically, such issues have a set floor or ceiling, called caps and collars that limits the adjustment.

Adjustable Rate

An interest rate on a loan or convertible security that changes periodically. For example, an adjustable rate mortgage has a certain interest rate that changes with varying frequency. The frequency of the change is called the adjustment rate. Usually, the adjustable rate is set according to some outside benchmark; for example, a loan might set the interest rate at LIBOR + 1%. An advantage of adjustable rate loans is the fact that one's interest rate might fall over time; this is a particular advantage if prevailing interest rates are high at the time of the loan. A disadvantage to adjustable rates is the uncertainty associated with them: one's payments on the loan generally rise or fall.
References in periodicals archive ?
The trust is comprised of six loan groups of adjustable interest rate, fully-amortizing mortgage loans secured by first liens on one- to four-family residential properties.
The certificates are supported by 6,284 subprime, fixed- and adjustable interest rate, monthly pay, one- to four-family, residential first and second lien mortgage loans as collateral.
The minimum household income needed to purchase an entry-level home at $504,080 in California in the second quarter of 2007 was $101,550, based on an adjustable interest rate of 6.
The minimum household income needed to purchase an entry-level home at $480,670 in California in the first quarter of 2007 was $96,910, based on an adjustable interest rate of 6.
Easy Access credit lines carry an adjustable interest rate of Prime +
The certificates are supported by 2,998 subprime, fixed and adjustable interest rate, monthly pay, one- to four-family, residential first and second lien mortgage loans as collateral.
The certificates are supported by 3,528 subprime, fixed- and adjustable interest rate, monthly pay, one- to four-family, residential first and second lien mortgage loans as collateral.
The bonus results when a homeowner elects a monthly adjustable interest rate, as opposed to a standard annually adjustable rate.
These hybrids begin with a low fixed-interest teaser rate, but quickly switch to an adjustable interest rate with costs that can quickly escalate mortgage payments by hundreds of dollars a month.
The transaction consists of five groups of adjustable interest rate, fully amortizing mortgage loans, secured by first liens on one- to four-family properties, with a total of 1,592 loans and an aggregate principal balance of $1,167,908,854 as of December 1, 2006 (the cut-off date).
The minimum household income needed to purchase an entry-level home at $356,350 in California in the first quarter of 2008 was $67,830, based on an adjustable interest rate of 5.
The minimum household income needed to purchase an entry-level home at $411,170 in California in the fourth quarter of 2007 was $82,200, based on an adjustable interest rate of 6.

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