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 ?
We were seeing people buying homes using a fixed-rate mortgage when they should have bought with an adjustable rate,'' he said.
A Convertible Adjustable Rate Mortgage is an ARM with a special option that allows you to convert it to a fixed-rate mortgage, usually after a set period of time.
Overbilling in the adjustable rate mortgage arena is real and oftentimes represents significant dollar amounts.
Luxury home owners list locking in rates as low as 1 percent in the early stages of their Adjustable Rate Mortgage (ARM).
These dividend reductions in the American Adjustable Rate Term Trusts serve several purposes.
Business Loan Express Business Loan-Backed Adjustable Rate Notes, series 2002-A
A prospectus containing more complete information on the American Adjustable Rate Term Trust Inc.
Heller SBA Pass-Through Adjustable Rate Certificates, series 1998-1
Brascan Adjustable Rate Trust I has exposure, on a leveraged basis, to a portfolio of adjustable rate and hybrid mortgaged backed securities and asset backed securities held by Brascan Adjustable Rate Limited Partnership.
17 /PRNewswire/ -- Piper Capital Management Incorporated announced an offering of 16,500,000 shares of American Adjustable Rate Term Trust Inc.
TORONTO -- Brascan Adjustable Rate Trust I (the "Fund") (TSX:BAO.
American Adjustable Rate Term Trust -- 1995 (ADJ), American Adjustable Rate Term Trust -- 1996 (BDJ), and American Adjustable Rate Term Trust -- 1997 (CDJ) invest primarily in adjustable-rate, mortgage-backed securities whose yields change based on various short-term indexes.

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