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What is a floating interest rate loan?

With a floating (variable) interest rate loan, the cost of borrowing will fluctuate with changes in the interest rate market.

A floating rate loan is flexible and can usually be repaid in full without notice and without penalty. 

Line of credit facilities and other transactional loans generally operate with a floating (variable) interest rate. 

The floating interest rate market is significantly affected by the Reserve Bank's management of monetary policy and the Official Cash Rate (OCR), which is reviewed 8 times per year.