Teaser rate

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Teaser rate

A low initial interest rate on an adjustable-rate mortgage to entice borrowers, that is later eliminated and replaced by a market-level rate.

Teaser Rate

In an adjustable-rate mortgage, an initial interest rate that one pays for a certain period of time, at which point the interest rate rises. A teaser rate exists in order to encourage people who would otherwise be unable to qualify for a mortgage to be able to buy a house. While a lender is required to disclose the higher interest rate and payment, their existence has been accused of creating a perverse incentive for unqualified borrowers to buy houses. Many believe this contributed to the housing bubble and the subsequent credit crunch.

Teaser rate.

A teaser rate is a low introductory interest rate on a credit card or an adjustable rate mortgage (ARM). The lender must tell you how long the teaser rate lasts and what the real cost of borrowing will be at the end of the introductory period.

teaser rate

A below-market rate for the initial period of an adjustable-rate mortgage.It is intended to attract borrowers to this type of loan. Interest usually adjusts to market rates or even somewhat higher on the first allowed adjustment date.

Teaser Rate

The initial interest rate on an ARM, when it is below the fully indexed rate.

See Adjustable Rate Mortgage (ARM)/Fully-Indexed Rate.

References in periodicals archive ?
RBS (LSE: RBS) and NatWest have announced that they will stop offering teaser rates for home insurance deals.
As part of this strategy he announced that RBS will no longer offer teaser rates or 0% balance transfer deals on any of its products.
Whatever proves to be true in the future, the number of savings accounts on the market offering teaser rates is already falling fast.
ROYAL Bank of Scotland are to ban teaser rates and sweeteners in a bid to get back to basics with simpler products.
We understand that customers are wary of teaser rates and conditional benefits and as such Noor has packaged the offer comprehensively for a wide variety of customers.
This was the lure that banks were using to attract potential home loan takers - teaser rates.
In February, 2009, SBI had kicked off the teaser rates scheme, with a fixed rate of eight per cent for the first year.
With low fees, no teaser rates and no hassles, it's time to say goodbye to your big banker and hello to Utah First.
There was no public notice announcing that hey, we're going after Black folks, but lenders targeted people of color with teaser rates on mortgages, and, well, the rest is history now.
And we all saw the advertisement for loans with low teaser rates and nothing down.
A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
A rate cut will not make most exploding adjustable rate mortgages affordable, because those loans are set to rise to market-based interest rates from very low teaser rates.