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 ?
With economists projecting several interest rate hikes through 2006, financial advisers say now is the time for borrowers to take a second look at the loan terms of adjustable-rate mortgages.
have halted or slashed production of the FHA adjustable-rate mortgages, officials at the companies said.
Banks and mortgage companies are now rushing to comply with new accounting guidelines issued by the Federal National Mortgage Association for adjustable-rate mortgages.
American Adjustable Rate Term Trust -- 1995 (ADJ), American Adjustable Rate Term Trust -- 1996 (BDJ), and American Adjustable Rate Term Trust -- 1997 (CDJ) invest primarily in adjustable-rate, mortgage-backed securities whose yields change based on various short-term indexes.
The Group I mortgage pool consists of first lien, second liens, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $183,375,125.
Millions Stretched Themselves Financially, Face Painful Adjustment as Payments on Adjustable-Rate Mortgages Reset
The Group I mortgage pool consists of first and second lien, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $203,532,831.
03-19 (CA) adjustable-rate limited obligation improvement bonds series A (LOC: Bank of New York (The)) 'AA-/F1+';
The Group I mortgage pool consists of first lien, second lien, fixed-rate, and adjustable-rate mortgage loans that have a cut-off date pool balance of $235,311,139.
The Group I mortgage pool consists of first lien, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $151,756,592.
The group I mortgage pool consists of adjustable-rate and fixed-rate, first and second lien mortgage loans with a cut-off date pool balance of $220,770,640.
Group I, which totals $233,876,071 as of the cut-off date, consists of fixed-rate and adjustable-rate mortgage loans secured by first and second liens on mortgaged properties that have original balances that conform to the guidelines of Fannie Mae and Freddie Mac.