From Longman Business Dictionaryswaptionswap‧tion /ˈswɒpʃənˈswɑːp-/ noun [countable] FINANCE a loan with a VARIABLE interest rate (=one that changes) that can be exchanged for a loan with a fixed interest rate if rates fall below a certain levelThe swaption mortgage will allow borrowers to switch out of fixed rate if the variable rate falls.
