Interest Rate Adjustment Period

The interest rate adjustment period refers to the number of times, or how often, interest rates on an ARM is adjusted after the initial rate period.

For example, a 3/1 ARM refers to a mortgage with an initial rate period of 3 years and an interest rate adjustment period of 1 year.

For hybrid ARMs, the initial years consist of fixed rates. And converts to a regular ARM after the initial period.

In this case, a 3/1 ARM will mean a loan with 3 years of fixed rate during the initial period, followed by adjustable rates after that.

The interest rate adjustment period should not be confused with the initial rate period or the adjustment interval.