Adjustable Rate Mortgage ARM
Definition of 'Adjustable Rate Mortgage ARM'
The Adjustable Rate Mortgage (ARM) (mostly in the United States) is also known as a variable-rate mortgage (mostly outside of the United States) or tracker mortgage.
This is a mortgage loan where the interest rate periodically adjusted based on an index. The most common indices used for the ARM are:
- 1-year constant-maturity Treasury (CMT) securities
- The Cost of Funds Index (COFI)
- London Interbank Offered Rate (LIBOR)
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