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 ?
"The rate cut will boost economic growth and will likely to benefit NRI home buyers through mortgaged route with reduction of EMIs if the borrowing is with floating interest rate. It will help boost the real estate sector and will lift property buyer sentiments," said Nimish Makvana, director of the Institute of Directors UAE Chapter.
The socialist MP emphasized that the legal changes were related to an EU Directive and assured that it would not make interest rates more expensive because the second change proposed by BSP affected the formation of floating interest rates.
Worth 6.2 million dinars, this loan will be repayable over 18 years with a three-year grace period, and a floating interest rate set at 1.5 %, presently.
The biggest drawback of the floating interest rate is the uneven nature of monthly installments.
The ICICI scheme provides home loans at a fixed interest rate valid for a period of either one year or two years, after which the loan will move to floating interest rate. Under the one-year fixed rate, interest at 10.50% is charged for loans below Rs 25 lakh, 11.00% for Rs 25 lakh to Rs 75 lakh and 11.50% for larger loans.
Some have APR as low as six per cent but for a limited period of time, after that a floating interest rate is introduced.
The 15-year loans have a floating interest rate and a 0.15 percent fee will be charged on the amount that was not disbursed, the Thai finance ministry said.
Under the agreement, Jordan will be entitled to choose between the fixed interest rate for three years and a floating interest rate for six months.
The bonds have maturities of up to seven years and are likely to carry a fixed or floating interest rate. The firm is likely to issue the bonds in a single sale or in several tranches.
The trust preferred securities will bear a floating interest rate equal to 90-day London Interbank Offered Rate (LIBOR) plus 1.6 percent.
The loan, provided by an out-of-state investment bank, includes a five-year term, a competitive floating interest rate and limited recourse provisions to the developer.
The Dollar-denominated loan will carry a floating interest rate, capped at LIBOR + 15 basis points.