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Senate backs 5% yearly limit on adjustable-mortgage hikes

The Senate approved legislation Wednesday that would prevent interest rates on adjustable-rate mortgages from increasing by more than five percentage points during the life of the loan. The measure, an amendment to a major banking bill, passed without objection after being proposed by Sen. Howard M. Metzenbaum (D) of Ohio.

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The Federal Home Loan Bank Board reported 66 percent of all conventional mortgage loans closed in July had adjustable interest rates, allowing the rate to change as other money market rates change.