A mortgage loan in which the lender may adjust
the rate of interest according to some specific index outside
the control of the bank or savings and loan institution, such
as the interest rate on U.S. Treasury bills or the average mortgage
rate. Adjustments are made regularly, usually at intervals of
one, three, or five years. In return for taking some of the risk
of a rise in the interest rates, borrowers get lower rates at
the beginning of the ARM than they would if they took out a fixed
rate mortgage. Commonly abbreviated as ARM.
