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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 ?
86 billion last year.This was reported even as lenders sought to boost profits through fees and charges on consumer products and transactions to beat the rate cap law, which has seen their interest income margins thin.
4 per cent, showing the effects of the rate cap," said Cytonn.
Although the two firms said the interest rate cap did not have material impact on business, Szlapak said the emergence of strong fintechs will certainly eat into the market share of the main financial institutions.
"The credit squeeze to SMEs is a deliberate effort by commercial banks to sabotage the economy so that the government may influence Parliament to remove the interest rate caps," Mr Njomo said.The interest caps law requires banks to pay depositors and charge borrowers interest rates pegged on the Central Bank Rate (CBR) the rate the Central Bank charges commercial banks that are in distress.
'Kenya needs a lot more fiscal consolidation which must be preceded by an attempt to fix the interest rate cap issue which is an unnecessary drag on growth that the Kenya economy does not need.
He said the company does not plan to send people home in spite of taking the hit from a shrinking customer base as the small and medium enterprises, their biggest customers, suffered effects of the interest rate cap that came to effect in October 2016.
Mortgage lender Housing Finance (HF) #ticker:HFCK is looking to cost cutting after its net profit for the first nine months of the year plunged 81 per cent as non-performing loans swelled this year following the introduction of interest rate caps.
The central bank is making the move as lending rates are not falling in line with deposit rate caps.
The two bond sales come on the back of a successful 15-year bond offer, which raised Sh50.59 billion of the Sh86.67 billion bids tabled by investors largely banks, fund managers and insurance companies."I expect the yield on papers to continue trending downwards for at least two months until we have a clear direction on rate caps especially because there's a lot of liquidity," said Kenneth Minjire, the head of securities at Genghis Capital.
Twenty-four of the 25 loans have, or are expected to have, interest rate caps for the initial term, which provide for a WA LIBOR strike price of 3.04%.