A historical scenario is using the movement and pattern of historical interest rates to show a borrower examples of how an ARM would perform.

While this process can seem mindless to many, a lot of borrowers get a better grasp of how index rate movements impact an adjustable rate mortgage which they are considering signing up for.

Just remember that in terms of interest rates, the past is never a dependable predictor of the future.

A historical scenario, at best, will describe the dynamics of how an ARM consisting of index value plus margin works.

It is not a good measure of where interest rates will probably be in future.