Dictionary of Real Estate Terms: floating rate
floating rate
an interest rate that is not fixed over the term of a loan, bond, or other fixed-income security, but is allowed to vary according to the change in a specified index.
Example: Financial Securities Company created a floating-rate mutual fund based on a portfolio of adjustable-rate mortgages. The yield on the fund varies from year to year, depending on the interest rates charged on the ARMs in portfolio.
