Adjustable rate

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Adjustable rate

Applies mainly to convertible securities. Refers to interest rate or dividend 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 ?
We were seeing people buying homes using a fixed-rate mortgage when they should have bought with an adjustable rate,'' he said.
A Convertible Adjustable Rate Mortgage is an ARM with a special option that allows you to convert it to a fixed-rate mortgage, usually after a set period of time.
Overbilling in the adjustable rate mortgage arena is real and oftentimes represents significant dollar amounts.
Luxury home owners list locking in rates as low as 1 percent in the early stages of their Adjustable Rate Mortgage (ARM).
Business Loan Express Business Loan-Backed Adjustable Rate Notes, series 2002-A
Heller SBA Pass-Through Adjustable Rate Certificates, series 1998-1
Brascan Adjustable Rate Trust I has exposure, on a leveraged basis, to a portfolio of adjustable rate and hybrid mortgaged backed securities and asset backed securities held by Brascan Adjustable Rate Limited Partnership.
Brascan Adjustable Rate Trust I is an investment trust established to provide unitholders with exposure to a portfolio primarily consisting of mortgage backed securities (MBS) with an actual or implied AAA rating.
Continued increases in the Federal Funds Target Rate will inevitably put pressure on earnings to the extent that our borrowing costs increase faster than the income on our adjustable rate mortgage related assets.
The collateral of the above MASTR Adjustable Rate Mortgages Trust deals consists of conventional, fully amortizing, 30-year short term, hybrid 3/1, and hybrid 5/1 adjustable-rate mortgage loans (ARMs) secured by first liens on one- to four-family residential properties.
The risks, uncertainties and other factors that could influence actual results are described in the Brascan Adjustable Rate Trust I prospectus and other documents filed with regulatory authorities.
Zimmer, said, "The Company's portfolio allocation strategy was modified over the last 12 months such that Bimini has substantially increased the proportion in its portfolio of short duration adjustable rate mortgage backed securities - those which have coupon reset frequencies that are one year or less.

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