Final answer:
The maximum adjustment cap for HRM and HPM when LTV <= 80% is a limit on how much the interest rate or monthly payment can change. These caps vary depending on the loan terms and lender's policies.
Step-by-step explanation:
In the context of loans, LTV (loan-to-value ratio) is the ratio between the loan amount and the appraised value of the property securing the loan. The maximum adjustment cap for HRM (Hybrid Rate Mortgage) and HPM (Hybrid Payment Mortgage) refers to the maximum change that can occur to the interest rate or the monthly payment for these types of mortgages.
When LTV is less than or equal to 80%, the maximum adjustment cap for HRM and HPM is often set at a certain percentage. This percentage varies depending on the specific terms of the loan and the lender's policies. For example, a common cap might be 2% for interest rate adjustments and 7.5% for monthly payment adjustments.
It's important to note that these caps are designed to provide some protection to borrowers, limiting the potential increase in mortgage costs in case of market fluctuations.