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The highest price, interest rate, or other numerical factor allowable in a financial transaction.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


(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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
The report 'Large Kenyan Banks: 2019 Peer Review - Lending Rate Cap Keeps Taking its Toll' is available at www.fitchratings.com or by clicking the link above.
The rate caps were introduced to end the practice of banks charging high interest rates for loans and to encourage Kenyans to save.
Because the only amount that can be spent to purchase the option is 4% of original premium, the price of the options determines how high the rate cap can be set.
This bill provided for property tax rate caps on local government.
Previously DEF had purchased an interest rate cap of 10% on the $1,000,000 principal.
Unlike their smaller, sleepier brethren, the aggressive National League thrifts couldn't have cared less about the loss of the interest rate cap; in fact, some argued for lifting it.
In December of 1990, MIDA elected to purchase a prime rate cap against other amortizing installment debt it used to acquire another company in California.
Under the proposed rule, the FDIC would amend the methodology for calculating the national rate and national rate cap for specific deposit products to provide a more balanced, reflective, and dynamic national rate cap.
Central Bank of Kenya's incentives to commercial banks and financial products can help ease the credit crunch to SMEs in the next 11 months as the sector awaits for parliament's amendment on interest rate cap.
While typical Dutch deals address the resulting interest rate risk with a total return swap, this transaction features a 10-year interest rate cap with a strike rate of 3.5%.