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Related to Interest Rate Caps: Interest rate cap and floor, Interest Rate Floors


The highest price, interest rate, or other numerical factor allowable in a financial transaction.


The maximum interest rate that may be charged on a contract or agreement. For example, an adjustable-rate mortgage may have an interest rate ceiling stating that the rate will not go over 9% even if the formula used to calculate the interest rate would have it do so. An interest rate ceiling reduces the risk of the party paying the interest. It is also called an interest rate cap. See also: Interest Rate Floor.


If there is an upper limit, or cap, on the interest rate you can be charged on an adjustable-rate loan, it's known as a ceiling.

Even if interest rates in general rise higher than the interest-rate ceiling on your loan, the rate you're paying can't be increased above the ceiling.

However, according to the terms of some loans, lenders can add some of the interest they weren't allowed to charge you because of the ceiling to the total amount you owe. This is known as negative amortization.

That means, despite a ceiling, you don't escape the consequences of rising rates, though repayment is postponed, often until the end of the loan's original term.

Ceiling can also refer to a cap on the amount of interest a bond issuer is willing to pay to float a bond. Or, it's the highest price a futures contract can reach on any single trading day before the market locks up, or stops trading, that contract.


(1) The uppermost surface of a room or space. When a lease makes all improvements “below ceiling”the responsibility of the tenant,one must ask if “ceiling”means the concrete bottom of the floor above,or if it means the suspended grid system with ceiling tiles.The space in between the two is called the plenum.All the wiring,plumbing,and ductwork go through the plenum,so the choice of which surface is the “ceiling”could mean a substantial difference in tenant responsibilities.

(2) An upper limit on something,such as the IRS ceiling of $1,000,000 worth of home mortgage debt for which one can deduct mortgage interest.

References in periodicals archive ?
Treasury last week promised the IMF that the interest rate caps would be removed in the next budget to allow the Central Bank more flexibility in directing the economy.
Although the brokerage fee did not exceed any applicable interest rate caps in other states, Fast Easy has also put in place steps to notify consumers in Northern Territory, Western Australia, South Australia, Victoria and Tasmania (where the same 48% state interest rate cap law did not apply) that they can claim a refund for the brokerage fee that was charged.
Still, restoring an interest rate cap is the time-tested reform which has proven most effective in curbing abusive money lending.
The interest rate cap is a derivative, as defined by SFAS 133, because it has an underlying (the one-month LIBOR); a notional amount (the principal amount of the outstanding loan); an initial net investment ($20,000) that is smaller than what would be required for other types of contracts; and a net settlement payable when the variable rate exceeds the cap rate of 6.
The only limitation on the interest deduction wi be the interest rate cap imitations specified in Sec.
Generally, interest rate caps are settled at some periodic date, e.
Kenya needs a lot more fiscal consolidation which must be preceded by an attempt to fix the interest rate cap issue which is an unnecessary drag on growth that the Kenya economy does not need.
The real estate sector has been hurt from a politically charged environment that kept investors away for most of this year and the adverse effects of an interest rate caps law introduced just over a year ago.
He said the company does not plan to send people home in spite of taking the hit from a shrinking customer base as the small and medium enterprises, their biggest customers, suffered effects of the interest rate cap that came to effect in October 2016.