The amount the interest rate may adjust up upon the first rate adjustment in an adjustable rate loan. A loan has a margin of 2% and is based on an index, which is at 3%. The loan’s initial interest rate is 5%. The loan’s cap structure is 2/2/5. At the first adjustment, the index is at 4%, so the new interest rate is 6%. This is a 1% adjustment, below the initial cap of 2%.
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