Floating Rate
Any interest rate that changes on a periodic basis . The change,usually tied to movement of an outside indicator,such as the prime interest rate.Movement above or below certain level is often prevented by predetermined floor and ceiling for a given rate. For an individual taking out a loan when rates are low, a fixed rate loan world allow to him or her to "lock in" the low rates and not be concerned with fluctuations.On the Other hand ,If interest rates were historically high at the time of the loan,he or she world benefit from a floating rate loan, because as the prime rate fall to historically normal level, the rate on the loan would decrease.
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