What type of loan has a fixed interest rate for the first 5 years and an annually adjustable rate for the remainder of the term?

The type of loan that has a fixed interest rate for the first five years followed by an annually adjustable rate for the remainder of its term is known as a Hybrid Adjustable-Rate Mortgage (Hybrid ARM). This loan structure is beneficial for borrowers who want the stability of fixed payments during the initial period, which allows for predictability in budget planning. After this initial fixed-rate period, the loan's interest rate adjusts annually based on market conditions, which can result in lower payments than traditional fixed-rate mortgages in some cases.

This hybrid feature attracts many homebuyers because they often plan to sell or refinance before the adjustable period kicks in, allowing them to take advantage of lower initial rates without facing the long-term variability of a standard adjustable-rate mortgage.