Adjustable rate mortgage (ARM)
The financial definition for Adjustable rate mortgage (ARM):
A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or margin, over the index, usually subject to per-interval and to life-of-loan interest rate and/or payment rate caps.
Adjustable rateAdjustable 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 preferred stock (ARPS)Adjustable rate preferred stock (ARPS)
Publicly traded issues that may be
collateralized by mortgages and MBS
Lehman Brothers Adjustable Rate Mortgage IndexLehman Brothers Adjustable Rate Mortgage Index
A benchmark index that includes all agency-guaranteed securities with coupons that periodically adjust based on a spread over a published index.
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