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: the rate may only change after periods of at least one year, according to a reference index, and the contract must cap both increases and decreases, with the allowed increase no larger than the allowed decrease. If the first period is shorter than three years, the rise is limited to one point in the second year and two points in the third. 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.