variable-rate mortgage

Also found in: Dictionary, Encyclopedia, Wikipedia.
Related to variable-rate mortgage: Adjustable rate mortgage

Adjustable Rate Mortgage

A mortgage with an interest rate that changes periodically. Generally speaking, an adjustable rate mortgage is linked to some major benchmark rate; for example, the interest rate may be stated as "LIBOR + 1%." The mortgage 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 an adjustable-rate mortgage is lower than that for a fixed-rate mortgage. This allows more people to qualify for an adjustable-rate mortgage; however, this kind of mortgage can be risky because the interest rate (and therefore the monthly payment) can rise unexpectedly. Indeed the prevalence of ARMs has been blamed for the housing bubble in the mid-2000s and the subsequent recession. See also: Credit Crunch, Teaser Rate.

variable-rate mortgage (VRM)

A precursor to the modern adjustable-rate home mortgage (ARM), and still used in the area of commercial mortgages.With a variable-rate mortgage,the interest rate on the loan changes whenever the index rate changes. The monthly payments usually change every month, also. Most construction loans are variable-rate mortgages. The ARM differs because the interest rate changes at predetermined intervals, such as once a year or once every 6 months.

References in periodicals archive ?
These are variable-rate mortgages that usually move in line with the base rate, so if it goes up or down, your repayments will follow in the same direction.
Alla Koblyakova of the university's school of design and the built environment said: "As variable-rate mortgages are more sensitive to financial shocks, it's a matter of national economic concern that there is such a geographical imbalance.
Indeed the number of people taking out variable-rate mortgages rose by more than 50 per cent last month, suggesting consumers think interest rates may have peaked.
Experts believe there are more than five million borrowers with variable-rate mortgages who could profit from discount deals.
A variable-rate mortgage is where the rate charged changes, usually in line with the bank base rate.
0 million of fixed- and variable-rate mortgage loans which are secured by one- to four-family residences and cooperative units in the first quarter of fiscal 1994.
That's good news if you've got a variable-rate mortgage because the numbers are likely to encourage the Bank of England to keep interest rates on hold.
17 million single family variable-rate mortgage bonds, class I bonds 'AAA/F1+';
Mike Thomas bought his first home in February and plumped for a variable-rate mortgage.
NEW YORK -- Fitch rates Utah Housing Corporation's $17 million single-family variable-rate mortgage bonds, 2005 series E class I bonds, 'AAA/F1+'.
4 million single family variable-rate mortgage bonds, 2005 series A class I bonds, 'AAA/F1+'.
8 million single-family variable-rate mortgage bonds, 2004 series C class I bonds is rated 'AAA/F1+' by Fitch Ratings.

Full browser ?