The interest rates for ARMs are calculated based on an index rate plus a margin. ARM loans typically calculate the interest rate on adjustment by adding a margin to a specific published index, such as the London Interbank Offered Rate (LIBOR) Index. The value of the index changes periodically, going up or down over time. Changes to the index value may cause changes in your interest rate. The margin that will be added to that index rate is stated in your ARM note.