Adjustable rate

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Adjustable rate

Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. Typically, such issues have a set floor or ceiling, called caps and collars that limits the adjustment.

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 ?
Summary: Adjustable rates and a lot of mortgage securities later triggered the 2008 crisis
Adjustable rates - a bank representative quotes you a fixed rate or a 'teaser rate', which expires in a few years and an adjustable rate kicks in.
The number of loans with an adjustable rate and the number of all loans would be used to calculate the percentage of loans that have adjustable rates in the zip code.
Adjustable rates, cash advance fees and assessing late fees sooner were among the suggestions.
Founded in 1999, First Hallmark offers a wide array of services, including mortgages for home purchases with fixed and adjustable rates, FHA loans, debt consolidation, the restructuring of existing loans and second mortgages.
Two of the loans are fixed; the other five have floating or adjustable rates that can be fixed once during the life of the loan.
This high intensity infrared tower uses short wave infrared heaters and a drive system to cure silicone tubing at adjustable rates. A driven capstan wheel pulls the extrusion from the die up through the heaters.
Interest rates haven't effectively changed because most buyers have shifted from fixed rate to the lower one-year adjustable rates, says Stan Duobinis, NAHB's director of forecasting.
For adjustable-rates, the proxy is the one-year adjustable rates surveyed by Freddie Mac.
In recent years, even some of these types of debt have been made with adjustable rates, but not nearly to the extent that home equity lines have been.(12)
Credit unions and other mortgage lenders would be required to highlight portions of a mortgage agreement that could be costly for consumers-such as adjustable rates and prepayment penalties-under regulations proposed by the Federal Reserve.
"We have a competitive set of products, whether an individual's needs are fixed or adjustable rates, conventional or jumbo loans," said Robbie Gendels, co-manager of NCB, FSB's New York residential mortgage team.

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