Adjustment Frequency

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Adjustment Frequency

In adjustable-rate mortgages, the rate at which changes to a mortgage's interest rate occur. Usually, the interest rate changes once a year, but some mortgages change rates as often as once a month or as seldom as every five years. The higher the adjustment frequency, the higher the financial risk for the homeowner. For example, if the adjustment frequency is once a month, a homeowner could find his/her mortgage payment increasing every month for five months before it goes down again. This ties up more of the homeowner's income, and increases the likelihood of default.
References in periodicals archive ?
While this somewhat narrow bandwidth-control range might be an advantage when trying to control a typical peak or null centered at or near those specific points, the rather extreme spacing between some of the adjustment frequencies, and the fact that it cannot independently adjust each channel, gave me the impression that the R/EQ-150 might be of very limited use.
Seemingly trivial price adjustment costs (as small as one millionth of the firm's annual revenue) can explain price adjustment frequencies as low as once or twice a year at inflation rates of 20 percent per annum and above.