variable-rate mortgage


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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.

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While management is committed to maintaining capital in excess of all regulatory requirements, the thrift's leverage is prone to volatility as management has demonstrated willingness to grow the single-family mortgage portfolio rapidly and substantially in periods that favor its variable-rate mortgage products.
Not only is this likely to have made borrowers more willing to take out variable-rate mortgages, but it has also led to a sharp fall in interest rates for new fixed-rate mortgages.
HOMEOWNERS with variable-rate mortgages will start feeling the pinch with the recent interest rate rise - yet millions of people continue to miss a trick by not remortgaging.
For many prospective homeowners, this predictability - the fact that you know what your monthly payment will be - outweighs the advantages offered by variable-rate mortgages.
Similarly, adjustable loans that reprice frequently at market rates, such as variable-rate mortgages, also are likely to be carried at an amount approximating market value.
TRACKER MORTGAGE THESE are variable-rate mortgages TRACKER MORTGAGE 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.
The news on interest rates is good for people with variable-rate mortgages but we are on a fixed rate so it doesn't affect us for the moment.
Homebuyers are putting their money where their mouth is and opting for standard variable-rate mortgages.
The interest rates on many types of consumer borrowing - including variable-rate mortgages, auto loans and credit card debt - are tied to the prime rate or directly to the federal funds rate.
Tracker funds differ from standard variable-rate mortgages in that they move exactly in line with the bank's base rate.
Alla Koblyakova of the School of Architecture, 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.

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