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Are residential loan interest rates fixed or adjustable?

April 26, 2017Adjustable fixed interest rates loan Residential

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Are residential loan interest rates fixed or adjustable?

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In order to offer the lowest rates possible to all borrowers, most LCEF residential loans are adjustable rate mortgages (ARMs). Loans may be structured as a one-year ARM with rates adjusted annually, a five-year ARM which fixes the rate for five years and then adjusts to a new rate every five years thereafter, or a 10-year ARM which fixes the rate for 10 years and then adjusts annually thereafter. All interest-rate adjustments, whether an increase or decrease, are made based on the LCEF Cost of Funds (the weighted average rate paid to LCEF investors) at the time of any adjustment. Each of the preceding ARMs may be amortized up to 30 years. LCEF also offers a 15-year fixed-rate mortgage loan which fixes the rate for the full 15 years, but the amortization terms cannot exceed 15 years.