A variable-rate mortgage (or adjustable-rate mortgage, ARM) is a home loan whose interest rate periodically adjusts based on a financial index reflecting the lender's borrowing costs. In the United States, these loans are federally regulated with caps on charges, while elsewhere they are often simply called variable-rate or tracker mortgages. The rate is typically tied to indices like the London Interbank Offered Rate (LIBOR) or Constant Maturity Treasury (CMT) securities, applied either directly, as an index plus a fixed margin, or based on index movement. This structure transfers interest rate risk from the lender to the borrower, who benefits from lower initial rates and potential savings if rates fall, but faces higher payments if rates rise. According to scholars, borrowers should generally prefer adjustable-rate over fixed-rate mortgages unless interest rates are already low.