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Related to Variable-rate: Variable Rate Loan


A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term. Limits are often placed on the degree to which the interest rate or the payments can vary.

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 ?
California Enterprise Development Authority (CA) (Alvarado Street Bakery) variable-rate demand industrial development revenue bonds series 2007 (LOC: Comerica Bank);
California Pollution Control Financing Authority (CA) (Desert Properties) variable-rate demand solid waste disposal revenue bonds series 2006B
California Enterprise Development Authority (CA) (Ramar International Corporation) taxable variable-rate industrial dev revenue bonds series 2008B;
275,945,000 variable-rate demand obligations, senior series class A-3 'AAA/F1+';
The short-term 'F1+' rating on the class I variable-rate demand bonds is based on the liquidity support provided by a standby bond purchase agreement (SBPA) issued by Lloyds TSB Bank plc, acting through its New York Branch.
The 'F1' rating is based on Memorial's ample financial cushion and liquidity, along with proper procedures in place to cover the approximately $150 million outstanding variable-rate debt in the unlikely event of an unremarketed put.
California Department of Water Resources (CA) variable-rate demand power supply revenue bonds series 2005F-3 (LOC: Bank of New York (The)), California Public Employees Retirement System (CalPERS) 'AA-/F1+';
59,600,000 variable-rate health facilities revenue bonds, series 2005I; (secured by a letter of credit provided by Bank of America, N.
64,900,000 Washington Health Care Facilities Authority variable-rate demand bonds (Catholic Health Initiatives) (Catholic Health Initiatives), series 2002B;
The bonds initially bear interest in the variable-rate mode, but may be converted to an auction or a fixed-rate mode.
340,000,000 variable-rate revenue bonds, series 1999B;
59,450,000 Franklin County, Ohio, variable-rate revenue bonds (Trinity Health Credit Group), series 2005B (insured by Financial Security Assurance, Inc.

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