Adjustable rate

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Related to Variable rate: Variable Rate Loan

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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
The key to successful implementation of variable rates is knowing their limitations and selecting the type of variable rate program that is best for the particular needs of a community.
CFC will convert existing 7-Year SFR loans to either a fixed rate or a variable rate loan, for a fee, paid quarterly over the remaining quarters in the current cycle.
Sales of whole loans can also involve a recourse arrangement whereby the seller guarantees the purchaser against credit losses or an arrangement whereby the purchaser receives a variable rate of interest on loans that earn a fixed rate.
Management took steps to reduce its variable rate exposure in 2016.
'Our strategy, when conditions allow, is to pass on variable rate reductions to both new and existing customers and we continue to do that,' said managing director of retail and commercial banking in Ireland, Robert Mulhall.
Variable rate mortgage customers have become the sacrificial lambs as the banks seek to make up for losses elsewhere.
The Sukuk marks an important milestone to stimulate the variable rate Sukuk market and it is envisaged to be a benchmark for the Malaysian bond market.
HSBC, Lloyds TSB, Nationwide and Skipton Building Society are all passing on the full 0.5% cut to their standard variable rate customers.
This reverts to the lender's standard variable rate for rest of the term, currently 7.09%.
For the precision application problem, the long-term goal is to obtain images on one pass of the plane, process and rectify images and data rapidly, and apply a variable rate or on-off prescription on the next pass of the plane.
Most of the commercial variable rate application (VRA) of fertilizer and ag chemicals is in the U.S.

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