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An ARM adjustment is the periodic change in the interest rate of an adjustable-rate mortgage (ARM). This adjustment is based on a specific benchmark or index plus a set margin and occurs at intervals defined in the mortgage agreement, such as annually or biennially. The adjustment affects the monthly payment amount, potentially increasing or decreasing it depending on the direction of the interest rate change. This mechanism allows the interest rate on the loan to align with current market conditions, offering flexibility but also introducing variability in payment amounts.