Interest Rate Tied To An Index That May Change

Adjustable-rate mortgages are making a comeback. But are these loans right for you? – Post-crisis borrowers saw them as risky because of their changing interest. rates are tied to the index, so if the index rate doesn’t increase, the mortgage rate won’t either. The rate could drop.

Generally, a loan tied to a lagging index (COFI, e.g.) is better when rates are rising. Leading index loans, like those tied to CMT, are best during periods of declining rates. If you’d like to see how the index for any ARM you are considering has changed in recent years you can find historical values for most popular ARM indexes on our site.