Where your Loan Interest Rate moves in line with the Cost of Funds Index that it is tracking. Typically a Variable Rate consists of the Cost of Funds (e.g. Base Rate or Libor), plus the Lender Margin. Whilst the Lender Margin is normally fixed for a defined period of time, the Cost of Funds can fluctuate meaning the total Interest Rate charged can also change. Also known as a Floating Rate.
