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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 ?
Similarly, usury ceilings were not binding until the middle of the 1960s.
Under the bill, "rent-to-own can only be treated as a lease, not a purchase, and therefore any state laws dealing with credit sales, purchases over time, truth in lending, usury ceilings, or disclosure of interest rates would be preempted.
Critics say the technical distinction is designed to avoid state and federal credit laws such as the Truth in Lending Act that might subject the transactions to usury ceilings and disclosures to consumers about such key items as the annual percentage rate of interest (APR).
usury ceilings or credible threats of more stringent regulation - effectively prevent them from rationing by price.
But as market interest rates fluctuated and rose sharply in the late 1970s with inflation, the profit margin based on the fixed rate became thin as usury ceilings prevented S&Ls from charging profitable mortgage rates.
Subsequently, many states passed what are known as usury ceilings, usually on consumer and mortgage loans, to protect the economically disadvantaged from unreasonably high interest rates.