Meaning & use
adjustable rate mortgage
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Meanings
nouncountablefinance
A home loan whose interest rate changes at set times, so the monthly payment can go up or down.
Grammar: Countable: say a mortgage or an adjustable rate mortgage; the plural takes -s.
Patterns
- take out an adjustable rate mortgage
- an adjustable rate mortgage on something
They chose an adjustable rate mortgage because the starting rate was lower than a fixed one.
Our adjustable rate mortgage goes up by half a percent next spring.
An adjustable rate mortgage can be risky if interest rates rise sharply.
nouncountablefinancebusiness
The loan type itself, seen as a category in banking and housing markets.
Grammar: Often used in the plural when talking about the market as a whole.
Patterns
- adjustable rate mortgages are common
- compare adjustable rate mortgages
Adjustable rate mortgages made up a large share of new loans that year.
Lenders must explain how adjustable rate mortgages differ from fixed loans.
Word forms
| plural | adjustable rate mortgages |
|---|
Common combinations
- take out an adjustable rate mortgage
- They took out an adjustable rate mortgage to afford a bigger house.
- a fixed rate mortgage
- A fixed rate mortgage keeps the same payment for the whole term.
- the initial rate
- The initial rate on the loan lasts only three years.
- interest rates rise
- If interest rates rise, the monthly payment goes up.
- refinance a mortgage
- They refinanced the mortgage when rates fell.
Synonyms and how they differ
- variable rate mortgage
- The usual British term for the same kind of loan; American speakers say adjustable rate mortgage.
- floating rate loan
- A broader finance term for any loan with a changing rate, not only home loans.
Opposites
Word family
- adjust verb
- To change something slightly so it works better.
- adjustment noun
- A small change made to something.
- mortgage noun
- A loan used to buy property.
- mortgagee noun
- The lender that holds a mortgage.
Commonly confused: adjustable rate mortgage or fixed rate mortgage? adjustable rate mortgage or reverse mortgage?
adjustable rate mortgage vs fixed rate mortgage
A fixed rate mortgage never changes, while an adjustable rate mortgage can change after the first period.
adjustable rate mortgage vs reverse mortgage
A reverse mortgage lets older homeowners borrow against their home; it is not the same as a changing interest rate.
Practice
Which sentence uses the term correctly?
Choose one answer.
An adjustable rate mortgage has a rate that can change, so the payment may change. Option 1 describes a fixed rate mortgage, option 2 confuses a mortgage with rent, and option 3 confuses it with a savings product.
Make it your own
Write a sentence using “adjustable rate mortgage”, then check it and compare it with the examples above.