Final answer:
Caps on adjustable-rate mortgages do not only refer to the maximum fluctuation in interest rates.
Step-by-step explanation:
No, this statement is False.
Caps on adjustable-rate mortgages not only refer to the maximum fluctuation in interest rates, but also define the maximum amount the interest rate can increase or decrease over a specific period of time. These caps are established to protect borrowers from significant changes in their mortgage payment.
For example, an adjustable-rate mortgage may have a cap of 2% per year and 6% over the life of the loan. This means that the interest rate can only increase or decrease by a maximum of 2% each year, and cannot exceed a total increase or decrease of 6% over the entire term of the mortgage.