Fully Indexed Interest Rate

Definition

Fully Indexed Interest Rate. A variable interest rate that is calculated by adding a margin to a specified index rate

Fully indexed interest rates are used for variable rate credit products. The interest rate on a variable (adjustable) rate mortgage corresponds to a specific benchmark (often the prime rate, but sometimes LIBOR, the one-year constant-maturity Treasury, or other benchmarks) plus a spread (also called the margin. The margin on a fully indexed interest rate product is determined by the underwriter and based on the borrower's credit quality.

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This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.