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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 ?
So interest rate ceilings on deposits probably had a limited effect on competition, since most of the time they were not binding.
33) Two factors gave impetus to the creation of MMMFs: the high inflation of the 1970s, which became embedded in market expectations, and the rise of market interest rates to levels much higher than those permitted by Regulation Q interest rate ceilings.
For an extended discussion of the distorting effects of interest rate ceilings on the financial system and the allocation of credit see Cargill [1991], pp.
The regulations governing personal loan markets that have been most frequently analyzed are interest rate ceilings and restrictions on the remedies available to creditors attempting to collect on delinquent or defaulted accounts.
Interest rate ceilings on commercial bank deposit services were imposed during the 1930s and regulated by the Federal Reserve System.
He said the government is designing "a series of measures" such as establishing a new credit fund to support the private sector, setting up a mechanism for partial credit insurance, removing interest rate ceilings in lending, and strengthening the function of the inter-bank market to improve the financial environment.
One likely area of convergence is the elimination of any remaining interest rate ceilings, although the primary factor in removal of such limitations may be the ongoing process of deregulation in this area, including the development of alternative financial instruments.
In addition, other concerns relating to possible politically motivated interference of the banking system, including but not limited to a distressed debt exchange by the government, directed lending, fees control, and interest rate ceilings, have diminished as these actions have either not taken place or done so in a watered-down form.