Adjustment Interval

The adjustment interval is the time between changes in interest rates on a loan.

Sometimes also referred to as the refresh rate, the adjustment interval is most often observed in adjustable rate mortgages as interest rates move together with the movement of indices.

For example, a mortgage with floating interest rates pegged to LIBOR might take the current rate of the index monthly, 3-monthly, 6-monthly, etc.

The change will affect interest rates and in turn, the monthly payment as well.

Under circumstances, the adjustment interval might not follow a rigid structure.

For example, when there is negative amortization on a loan, lenders might trigger a rate refresh on an adhoc basis to clear the unpaid balances.