interest rate cap

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Interest rate cap

An interest rate agreement in which payments are made when the reference rate exceeds the strike rate. Also called an interest rate ceiling. Related: Interest rate floor.


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.

interest rate cap

In an adjustable-rate mortgage, a ceiling on the amount the interest rate may increase during any described period,such as one year,or over the lifetime of the loan.

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.
In response to ASIC's concerns, Fast Easy has agreed to refund all affected consumers in Queensland, New South Wales and the Australian Capital Territory any amounts paid in brokerage fees above the state-based interest rate caps of 48% by November 2014.
The guidance pertaining to the transferability of the interest rate cap is not included in SFAS 133, but rather in interpretative guidance.
In addition, the amount of interest expense would be subject to the interest rate caps based on Moody averages.
We have expressed the concern about the interest rate caps and the impact it has on the overall economy and the SMEs.
While the two bills still have to be reconciled, the interest rate now looks likely to become law, which should put an end to an industry that has proliferated since New Hampshire repealed its usury laws in 2000, making it the only state in New England with no interest rate cap.
Previously DEF had purchased an interest rate cap of 10% on the $1,000,000 principal.
Originally, the colonies imported English law, which included an interest rate cap statute called the Statute of Anne.
Coupling IFRS 9 with the impact the interest rate cap has had, I think the two will probably curtail growth in specific segments.
Though important, the reversal of the interest rate cap, will not be sufficient to improve access to credit,' the World Bank said in its economic update.
Global Banking News-January 11, 2013--Bank of Spain suggests interest rate cap on deposit to rein in price war(C)2013 ENPublishing - http://www.