(ARM) A mortgage loan in which the interest rate may increase or decrease over the course of the loan depending on specific economic indicators. Differs from a fixed rate loan where the interest rate remains the same throughout the loan term.
A type of loan with an interest rate which changes periodically as determined by a financial index. The repayment period may increase or decrease when the index increases or decreases. Most adjustable rate loans have "caps" or ceilings limiting interest rate increases or decreases.
An adjustable, or variable, rate loan is a loan in which the interest rate adjusts periodically, based on changes in a specified index (such as the bank's "prime rate" or a specified rate published by the Federal Reserve System).