Variable-rate loan

(redirected from Adjustable-Rate Loans)

Variable-rate loan

Loan made at an interest rate that fluctuates depending on a base interest rate, such as the prime rate or LIBOR.

Variable-Rate Loan

A loan with an interest rate that changes periodically. Generally speaking, a variable rate loan is linked to some major benchmark rate; for example, the interest rate may be stated as "LIBOR + 1%." The loan may or may not have a cap on how much the interest rate can rise or fall, or on how often the interest rate may change. Very often, the initial interest rate for a variable-rate loan is lower than that for a fixed-rate loan. This allows more people to qualify for a loan; however, this kind of loan can be risky because the interest rate (and therefore the monthly payment) can rise unexpectedly. See also: Adjustable-rate mortgage.
References in periodicals archive ?
Last year, most borrowers losing their homes were on sub-prime adjustable-rate loans.
Prime, adjustable-rate loans have higher delinquency rates than prime, fixed-rate mortgages and currently average 0.
Greater lender discounts for introductory adjustable-rate mortgage rates and the increasing popularity of hybrid ARMs relative to one-year adjustable-rate loans has resulted in a decline in the share of ARMs in overall mortgage lending, according to a survey by Freddie Mac.
Noted the Bloomberg News service on April 25: "Mortgages entering foreclosure jumped 72 percent during the first quarter from a year earlier, as higher interest rates increased monthly payments and strained the budgets of homeowners with adjustable-rate loans.
Foreclosure activity in California and other Western housing markets is on the increase in part because high-risk adjustable-rate loans are beginning to reset to fully amortized payment schedules, a property tracker said Monday.
Recently, NYMC introduced jumbo mortgages pegged to the London Interbank Offered Rate (LIBOR), enabling homeowners to obtain adjustable-rate loans with current rates of less than three percent.
The bonds backed by adjustable-rate loans were AAA, guaranteed by MBIA.
Transactions with a number in their series name comprise of fixed-rate loans, and transactions with a letter in their series name comprise of adjustable-rate loans.
Although interest-only and adjustable-rate loans can initially save a typical homebuyer hundreds of dollars in monthly payments, such loans leave borrowers vulnerable to sharply higher payments when interest rates adjust or principal payments start to come due, said Nicolas P.
More and more people have been using interest-only or adjustable-rate loans this year.
The underlying adjustable-rate loans consist of approximately $550 million of New Century's recent production.
by mortgagors who claim to have been overcharged on their adjustable-rate loans.