Loan Screens > Account Information Screen Group > ARM Information Screen > ARM Detail tab > Periodic Rate Caps field group

Entry: User, numeric, 7 digits (not including the decimal)

F/M: Yes

Mnemonic: LNAMCM

Screen: Loans > Account Information > ARM Information > ARM Detail tab

This is a percent field. Enter “2.00000” for 2%. This is the minimum percentage by which the loan rate can be changed. (For example, if 2% is in this field, the new rate must be at least 2% higher or lower than the current rate or the rate will not change.)

The new rate is calculated as follows:

The rate is pulled from the rate table and added to the margin. (This becomes the work rate.) Subtract the work rate from the current rate. Compare the result to the Rate Change Minimum field. If the result is higher than this field, the work rate will become the new rate. If it is lower, the rate won’t change.

Example: A loan is currently at 8%, with a rate change minimum of 2.00000 (2%) and a margin of 1%. At rate change time, the rate table is 8.5%. The new work rate would be 9.5. The old rate (8.00) is subtracted from the work rate (9.5) for a difference of 1.5. This is less than the rate change minimum of 2.00000, so the loan rate will not change.

If the work rate were 10.5 (for a difference of 2.50), the work rate would become the new loan rate.