Definition: A limit on an adjustable-rate mortgage's interest-rate change during a specified adjustment period.
Example
A two-percentage-point periodic cap limits an otherwise larger increase from 5% to 7% at that adjustment.
Keep the distinction clear
The first adjustment may have a different cap. A periodic cap and a lifetime cap apply at different levels; read the loan's specific terms.
Related terms
Adjustable-Rate Mortgage (ARM) ยท Index Rate (ARM)
Keep studying
References: CFPB: ARM rate caps
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