An amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.
The adjustment on the mortgage occurs periodically as agreed in the mortgage contract.
Most lenders use the same group of indexes when calculating rates for adjustable rate mortgages. Margins are calculated by lenders based on the risk borrowers pose in paying back their loan. The more risk a borrower presents the higher their margin which results in a higher fully indexed rate. A fully indexed rate is the total of both margin and index rate used by lender.
