Variable Interest Rate
Definition
An interest rate that can change under the terms of an agreement, often in response to a benchmark rate. Changes can affect payments or the amount of interest paid.
Canada
What happens to a variable-rate mortgage when rates change?
Many Canadian variable mortgages use a lender’s prime rate plus or minus a contractual spread. If your rate rises, an adjustable payment can rise too. With a fixed-payment variable mortgage, more of the same payment can go toward interest, depending on the contract.
Bank of Canada