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 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.
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.
The trust preferred securities will bear a floating interest rate equal to 90-day London Interbank Offered Rate (LIBOR) plus 1.
Floating interest rate will likely cause losses to the government with the increase in benchmark interest rate of the central bank.
The three-year, nonrecourse, first-mortgage loan provided for approximately 89 percent loan-to-cost with a floating interest rate.
The interim financing has a floating interest rate and an interest-only amortization.
133, synthetically converting a fixed interest rate liability to a floating interest rate using an interest rate swap has totally different accounting than synthetically converting a floating interest rate liability to a fixed interest rate using an interest rate swap.
The facility provides for aggregate borrowings of up to a maximum amount of USD 200m, subject to increase to USD 300m at KeyBank's discretion, has a five-year term, and a floating interest rate dependent on the type of property in the facility and the leverage level of each individual asset.
seeks to reduce its lowest mortgage floating interest rate to 0.
75 percent for the first five years, and thereafter will bear a floating interest rate.