Interest rate ceiling


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Interest rate ceiling

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.

Interest Rate Ceiling

The highest rate possible under an ARM contract; same as “lifetime cap.”

It is often expressed as a specified number of percentage points above the initial interest rate. See Adjustable Rate Mortgage (ARM)/ How the Interest Rate on an ARM Is Determined.

References in periodicals archive ?
Consequently, banks discovered they could obtain funds that were free from reserve requirements and simultaneously circumvent the Fed's Regulation Q interest rate ceilings by borrowing Eurodollars from their foreign branches.
The empirical results suggest that the impact of security and collection remedies on personal loan interest rates varies with the restrictiveness of the legal interest rate ceiling. In the case of Wisconsin and Massachusetts, the low ceiling states, collateral variables (including income subject to garnishment) as a group do not have a statistically significant impact on loan interest rates.
Muscat: Last week, the personal loan interest rate ceiling was reduced to six per cent from seven per cent at the time when the US economy is running into trouble.
The CBO in March brought down interest rate ceiling on new personal loan to seven per cent from eight per cent, offering relief to bank borrowers.
The apex bank in March brought down interest rate ceiling on new personal loan to seven per cent from eight per cent, offering relief to bank borrowers.
The Central Bank of Oman (CBO) on Sunday brought down interest rate ceiling on new personal loan to seven per cent from eight per cent, offering relief to bank borrowers.
CBO said that the board will also review the interest rate ceiling on personal loans offered by commercial banks in Oman.
MUSCAT Eoe1/4" The Central Bank of Oman yesterday kept unchanged the interest rate ceiling on personal loans offered by commercial banks at eight per cent.
Riad Salameh that it has set maximum interest rate ceilings for deposits in Lebanese pounds and U.S.
Fitch said restrictions on retail lending (amounts, tenors and interest rate ceilings) have hindered growth in retail lending, while restrictions on loan/value ratios for residential mortgages, especially for expatriates, may limit the potential recovery in the residential market.
" This may be attributed to a number of factors, such as depreciation of rupee resulting in the rise in inflows through rupee denominated non- resident Indian ( NRI) accounts to take advantage of the depreciation, hike in interest rate ceilings on NRI deposits since September, 2008 and uncertainties in oilprices, which might have induced the workers to remit their money to India as a hedging mechanism due to its relatively better growth prospects," the report said.
In those days, there were interest rate ceilings - a legacy of the Great Depression of the 1930s -- on the interest rates financial institutions could pay for deposits.