Features

• Adjustable-rate mortgages have the interest rates on their loans pegged to a number of financial indices, such as the London Interbank Offered Rate, or LIBOR, and the U.S. Constant Maturity Treasury, or CMT. Some adjustable-rate mortgages will have introductory rates, in which the interest rates do not change for the first two years.
  
  

Effects

• When the interest rates on the indices climb, so do the interest rates on the loans, bringing the monthly payments with them. In the financial crisis of 2008, many homeowners with adjustable-rate mortgages went into foreclosure due to a significant spike in the size of their payments.
  
  

Theories/Speculation

• Many macroeconomic factors can cause the prevailing rate of interest on LIBOR, CMT and other indices to rise. These can include actions of a country's central bank, the state of the economy and the current demand for loans.