A variable rate mortgage is a mortgage loan where the interest rate varies to reflect current market conditions. The interest rate on these mortgages will normally vary with changes to the base rate of the central bank or stock and bond indexes and reflects changing costs on the credit markets. This method of variation directly linked to underlying costs benefits lenders by ensuring a profit by passing the interest rate risk to the borrower.

In the United States, variable rate mortgages are known as adjustable rate mortgages, or ARM loans.

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