Reset frequency

Reset frequency

The frequency with which the floating rate changes.

Reset Frequency

In adjustable-rate loans, the rate at which changes to a loan's interest rate occur. Sometimes, the interest rate changes once a year, but some loans change interest rates as often as once a month or as seldom as every five years. The higher the reset frequency, the higher the financial risk for the homeowner. For example, if the reset 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 ?
The formulas have several variables, including interest rates, reset frequency and the portfolio yield.
Two separate pools of adjustable rate mortgage loans indexed to the 11th District Cost of Funds Index and divided by reset frequency collateralize the certificates.
A class contains the same length and the same rate reset frequency funding.
category contains the same length and same period rate reset frequency funding.
One category contains the same duration and same rate reset frequency funding.