Ceiling

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Ceiling

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

Ceiling

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.

Ceiling.

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.

ceiling

(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 ?
Commonwealth legislation introduced a cap on payday loans in July 2013 which supersedes the state and territory-based interest rate caps, and together with further Regulations in June 2014, make it clear that broker costs do not sit outside the small amount loan cap.
NSWMA Vice President for Government Affairs David Biderman added, "NSWMA is pleased that we were once again able to persuade City officials that the current rate cap is unfair.
There is a long history dating back to before the American Revolution of the use of interest rate caps to protect against usury.
These regressions examine the effect of the tax rate cap while controlling for other characteristics of the districts.
When the rate caps expired, electricity would be provided at prevailing market rates for generation.
The TRA '97 retains the key-person exception and the interest rate caps.
Purchasing interest rate caps would provide the collateral manager another option to mitigate the interest rate risk that arises with the addition of fixed rate assets.
DeCampli said the discussion of rate cap extensions will have a detrimental effect on prices for electricity in 2010.
The Commission's ruling denies customers any share of the merger savings by giving Met-Ed and Penelec credit for providing service under a rate cap - something they were already legally obligated to do.
5 percent, lower than proposed by the FSA, for two years after the lending rate cap is lowered to 20 percent from 29.
The issue with respect to this transaction relates to a matter of documentation, rather than the purpose for which the interest rate cap was created or its economic substance as the cap continues to provide an effective hedge against potential future interest rate movements," said Stephen A.
VaPERL urges lawmakers to repeal the Payday Loan Act and require that payday lenders operate under the same 36 percent interest rate cap that applies to other small loan lenders in the Commonwealth.