Indexed ARMs

Indexed ARMs

Adjustable rate mortgages on which the interest rate is mechanically determined based on the value of an interest rate index.

Indexed ARMs are distinguished from Discretionary ARMs, in that the first provides the lender with zero discretion in setting future interest rates, while the latter provides the lender with complete discretion. All ARMs discussed in Adjustable Rate Mortgage (ARM) are indexed ARMs, which is the only kind used in the U.S.

References in periodicals archive ?
As a result, 1-year LIBOR indexed ARMs may have adjusted up or did not adjust materially down compared with Treasury-indexed ARMs.
When the interest-rate difference between a 30-year, fixed-rate mortgage and the fully indexed ARM rate decreases, lenders generally offer a larger initial rate discount on the ARM," observed Nothaft.
When the interest-rate difference between a 30-year, fixed-rate mortgage [FRM] and the fully indexed ARM rate decreases, lenders generally offer a larger initial rate discount on the ARM," said Nothaft.