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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Rate Index


Synonyms:adjustable-rate mortgage index, yield index
Filed Under: financial-banking, mortgages
Tags: banking, mortgage, rates
 

Definition of rate index

rate index
1. A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.

Related Terms and Acronyms:

  • adjustment period   The time between changes in the interest rate in an adjustable-rate mortgage.
  • consumer price index (CPI)   An index that measures movements in the average price of products and services typically consumed by Canadian families.
  • index   A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes.
  • interest rate cap   A limit to the interest rate increases and decreases on an adjustable rate loan; either from one adjustment period to the next or over the life of the loan.
  • payment cap   A contractual limit on the size of the monthly payment of an adjustable-rate mortgage or other variable rate loan.
  • spread   The difference between the interest rate charged to borrowers and the interest rate paid to depositors.
  • variable interest rate   Percentage that a borrower pays for the use of money, and which moves up or down periodically based on changes in other interest rates.
  • variable rate   A floating percentage value that fluctuates based on certain conditions.
  • variable rate mortgage (VRM)   Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an "Adjustable-rate Mortgage."
      ➥  A type of mortgage loan offered by brokers and lenders.

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