Teaser rate

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Teaser rate

A low initial interest rate on an adjustable-rate mortgage to entice borrowers, that is later eliminated and replaced by a market-level rate.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Teaser Rate

In an adjustable-rate mortgage, an initial interest rate that one pays for a certain period of time, at which point the interest rate rises. A teaser rate exists in order to encourage people who would otherwise be unable to qualify for a mortgage to be able to buy a house. While a lender is required to disclose the higher interest rate and payment, their existence has been accused of creating a perverse incentive for unqualified borrowers to buy houses. Many believe this contributed to the housing bubble and the subsequent credit crunch.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Teaser rate.

A teaser rate is a low introductory interest rate on a credit card or an adjustable rate mortgage (ARM). The lender must tell you how long the teaser rate lasts and what the real cost of borrowing will be at the end of the introductory period.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

teaser rate

A below-market rate for the initial period of an adjustable-rate mortgage.It is intended to attract borrowers to this type of loan. Interest usually adjusts to market rates or even somewhat higher on the first allowed adjustment date.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.

Teaser Rate

The initial interest rate on an ARM, when it is below the fully indexed rate.

See Adjustable Rate Mortgage (ARM)/Fully-Indexed Rate.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Vault weeds out plans that are designed to game the system with teaser rates or pricing structures that make it impossible for consumers to realize the advertised rate.
The lenders use baiting tactics reminiscent of the housing-boom era -- "teaser rates," promises of zero payments for one or two months, refunds of escrows, switches from long-term fixed rates to short-term floating rates, and a grab-bag of bogus claims about saving money.
Lulic pointed out there are many websites that list "a bunch of static teaser rates from online lenders" in a comparison chart, or setup to sell off a buyer's data to the highest bidder, and some who capture a customer's data and try to broker a loan offline.
RBS (LSE: RBS) and NatWest have announced that they will stop offering teaser rates for home insurance deals.
British providers of financial services Royal Bank of Scotland (RBS) and NatWest on Friday revealed their new advertising campaign, which is said to focus on fairness while highlighting that both banks ended teaser rates for customers last year.
Do not be easily tempted by those "teaser rates" for home finance.
Whatever proves to be true in the future, the number of savings accounts on the market offering teaser rates is already falling fast.
ROYAL Bank of Scotland are to ban teaser rates and sweeteners in a bid to get back to basics with simpler products.
Stacey Pogue, a senior policy analyst for the left-leaning Center for Public Policy Priorities, says the pre-ACA premiums - what she calls "teaser rates" - analyzed in the report do not reflect average rates paid on the individual market.
We understand that customers are wary of teaser rates and conditional benefits and as such Noor has packaged the offer comprehensively for a wide variety of customers."
Consumer groups, such as California Health Advocates, have argued that the bill could keep cynical insurers from building market user using teaser rates that they know to be unrealistically low, according to an analysis of the bill posted by the California Senate staff.