Arm interest rates Meaning and Definition
Arm Interest Rates
Pronunciation
/ɑːrm ɪnˈtɛrist ˌreɪts/
Part of Speech
Noun
Definition
A type of adjustable-rate mortgage where the interest rate is tied to a specific index, such as the London Interbank Offered Rate (LIBOR) or the US Treasury yield, and can change periodically based on market conditions, often with a cap or floor.
Etymology
The term “Arm” originated from the word “adjustable-rate mortgage,” commonly used in the financial industry.
Usage Notes
Arm interest rates are often used for borrowers who expect to sell their property or refinance within a short period, as they typically offer lower introductory interest rates compared to fixed-rate mortgages.
Cultural References
Arm interest rates have been featured in various financial news articles and documentaries, including “The New York Times” and “60 Minutes.”
Idiomatic Expressions or Phrases
“The arm interest rate is a hot topic in the financial world” or “Borrowers are opting for arm interest rates due to the current market conditions.”
Related Words or Phrases
- Fixed-rate mortgage
- Variable-rate mortgage
- Adjustable-rate mortgage (ARM)
Collocations
- Arm interest rates are tied to the London Interbank Offered Rate (LIBOR)
- Arm interest rates can increase or decrease periodically
Frequency of Use
Arm interest rates are commonly used in financial transactions, with a moderate frequency of use in modern language.
Common Misspellings
- Arms interest rates
- Arm Interst Rates