4.1.9.4.3 Rate Attributes
This section describes the new business fields used in the Rate Attributes secondary tab of the Product Characteristics Rule.
Figure 4-24 Rate Attributes Tab to define the Product Characteristic Rule
Table 4-22 Fields to add the Rate Attributes for Product Characteristic Rule and their Descriptions
| Field | Description |
|---|---|
| Repricing Frequency | Contractual frequency of rate adjustment. |
| Tease Period | The tease period is used to determine the length of the tease period. |
| Tease Discount | The tease discount is used in conjunction with the original rate to calculate the tease rate. The tease rate is the original rate less than the tease discount. |
| First Reset Cap |
This indicates the maximum delta between the initial rate and the first reset for mortgage instruments that have a tease period. This rate will be applicable at the tease end period, before the first reset. After this, the periodic and lifetime cap value will be applied. The value of this field will be automatically populated from the Product Profile window if the product is mapped to Product Profile and value is defined for First Reset Cap. For example: Current Rate = 3.5% (from the instrument record) Margin = 0.3 % First Reset Cap = 0.5% (from the instrument record) First Reset Floor = 0.1% (from the instrument record) Scenario 1: If New Forecasted Rate = 5.1% (Forecast Rates Assumption) The fully indexed rate (after applying minimum rate change, rounding effects) is higher than the (Current Rate + First Reset Cap). So, the new rate assigned will be 3.5% + 0.5% = 4.0% |
| First Reset Floor | This is the initial minimum value for mortgage instruments that have a tease period. This floor rate will be applicable at the tease end period, before the first reset. After this, the periodic and lifetime floor value will be applied. The value of this field will be automatically populated from the Product Profile window if the product is mapped to Product Profile and value is defined for First Reset Floor. |
| Rate Cap Life | The maximum rate for the life of the instrument. |
| Rate Cap Floor | The minimum rate for the life of the instrument. |
| Rate Increase Period | The maximum interest rate increase allowed during the cycle on an Adjustable Rate instrument. |
| Rate Decrease Period | The maximum amount rate can decrease during the repricing period of an Adjustable Rate instrument. |
| Rate Set Lag | Period by which the rate lookup lags the repricing event date. |
| Minimum Rate Change | The minimum required change in rate on a repricing date. |
| Rate Change Rounding Factor | Percent to which the rate change on an adjustable instrument is rounded. |
| Rate Change Rounding Type |
The method used for rounding of interest rate codes. The choices are as follows:
|