Variable rate

A variable rate is a mortgage interest rate that can be adjusted periodically (annually, every 3 years, or every 5 years) based on the reference index published by the FPS Economy. In Belgium, the law protects borrowers with a cap system: the variation can never exceed double the initial rate (legal cap). Common formulas are 1/1/1 (annual revision), 3/3/3 (every 3 years), or 5/5/5. The initial variable rate is lower than the fixed rate, offering lower starting payments. It suits borrowers who anticipate rate decreases or plan to resell quickly. About 20% of Belgian mortgages are variable rate.