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Related to Rate Ceiling: discount rate, Cap rate


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 ?
Because of that, banks are reluctant to make longer term loans for fear of being locked into the lower rate ceiling.
Wisconsin was selected to represent states with a severely restrictive interest rate ceiling structure.
Under the current interest rate ceiling, the maximum APR would be 28%.
The territory's banking cartel is to end its role of deciding the local savings deposit rate ceiling from next week when interest rates are fully liberalized.
That order removed the rate ceiling for capacity release transactions (until Sept.
One of the areas he will definitely raise them from is the upper rate ceiling on National Insurance contributions, which in practice will mean a 50 per cent tax rate.
1, when a legislative rate ceiling went into effect on current bills.
8 Kyodo The House of Representatives Finance Committee on Wednesday endorsed a package of bills to tighten rules on collateral-free loans to small companies, including cutting the interest rate ceiling to 29.
In South Korea, 14 banks were suspended, the interest rate ceiling was raised and measures were taken to liberalize financial markets to make it more market-driven and less susceptible to political intervention or corruption.
The politically pledged tax rate ceiling has been reached, assessed value (AV) growth assumptions are very aggressive, and amortization is very slow, so future financing flexibility will be limited.
Summary: Muscat: Last week, the personal loan interest rate ceiling was reduced to six per cent .
The Association of Banks' role in determining the savings deposit rate ceiling will be abolished in July when the final stage of rate deregulation is implemented, which will lift the remaining rate rules and allow individual banks to set their own rates on all types of deposits.