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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 ?
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.
4 million, interest expense excluding the impact of mark-to-market of interest rate caps decreased 14% compared with second quarter 2008 to $28.
Earnings per share excluding non-cash charges related to the mark-to-market of interest rate caps and share-based compensation are determined by dividing the amount of net income excluding such charges by the average number of shares outstanding for that period.
Originally, the colonies imported English law, which included an interest rate cap statute called the Statute of Anne.
The only limitation on the interest deduction wi be the interest rate cap imitations specified in Sec.
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.
Cash payments will be due the Company from the issuer of the interest rate cap agreements if the prime rate exceeds 6.
Short term interest rates have climbed to the range where our interest rate caps can begin to pay-off.
However, given the various interest rate caps and /or swap arrangements NYPA has entered into, the true variable interest rate exposure is closer to 25%-30%.
The company has arranged financing under a five-year mortgage loan, which bears interest at LIBOR plus 110 basis points, including interest rate caps which limit the maximum average interest rate over the five-year term to 7.
Treasury securities adjusted to a constant maturity of one year, are subject to minimum and maximum lifetime interest rates as well as periodic interest rate caps and floors.