teaser rate - low rate of interest offered for a very short time (weeks or months) at the start of a mortgage loan as an inducement to the borrower to accept the loan and to provide a lower mortgage payment for easier borrower qualification. For example, if fixed rate loans are offered at 8%, an adjustable rate mortgage with a teaser rate might be offered at "2.9% for the first 3 months." After the first few months, the rate will adjust dramatically upward. Teaser rates are usually associated with negative amortization. See also adjustable rate mortgage and negative amortization.

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