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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.
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 ?
These regulatory measures include cash reserves, security requirements, credit controls, and interest rate ceilings and floors.
The estimated coefficients also suggest that a decrease in the maximum amount of income that may be garnished or assigned to the lender increases the loan interest rate as long as the interest rate ceiling is above 21 percent.
Under the current interest rate ceiling, the maximum APR would be 28%.
The tripartite coalition intends to review the new rate ceiling three years from now as the cut is expected to have serious effects on small moneylenders.
Treasury last week promised the IMF that the interest rate caps would be removed in the next budget to allow the Central Bank more flexibility in directing the economy.With the deposit rate floor and lending rate ceiling, changes in the CBR were not effective as they moved both the supply and demand side of money equally.
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.
First of Omaha Service Corporation), which held that a nationally chartered bank may provide credit at the rate ceiling of the state in which it is located, regardless of the ceiling in the borrower's state.
The CBO has taken numerous measures including consecutive reduction of interest rate on personal loans and the latest action was in October 2013 where a circular was issued to all commercial banks in the Sultanate to reduce interest rate ceiling on personal loans from 7 per cent to 6 per cent per annum.
From the bill, the coalition parties have dropped an earlier-planned special high ceiling of 25.5 percent to ease the impact of the rate ceiling cut on moneylenders in the first two years after the ceiling reduction.
The bank association's role in determining the savings deposit rate ceiling will be abolished in July, when the final stage of rate deregulation is implemented, lifting the remaining rate rules and allow individual banks to set their own rates on all types of deposits.