The statement; ARMs help lenders combat unanticipated inflation changes, interest rate changes, and a maturity gap is "True".
<h3>What is (ARM) Adjustable-Rate Mortgage?</h3>
A home loan with a variable interest rate is known as an adjustable-rate mortgage (ARM). The starting interest rate on an ARM is set for a specific amount of time. Following then, the interest rate charged on the unpaid balance resets sporadically, sometimes on a monthly basis.
The characteristics of ARM are-
- A mortgage with an adjustable rate (ARM) is a loan for a home whose interest rate is subject to cyclical change based on the performance of a chosen benchmark.
- The amount that the interest rate and/or payments can increase annually or throughout the life of the loan are typically capped in ARMs.
- For purchasers who are going to maintain the loan for a short time and can afford any potential rises in their interest rate, an ARM might be a wise financial decision.
To know more about the Adjustable-Rate Mortgage, here
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The complete question-
ARMs help lenders combat unanticipated inflation changes, interest rate changes, and a maturity gap. (True/False)
