# Ceiling

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## Ceiling

The highest price, interest rate, or other numerical factor allowable in a financial transaction.

## 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.

## Ceiling.

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.

## ceiling

(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 ?
Second, deposit rate ceilings would bind, and credit rationing would occur (lenders effectively would require larger down payments, exacerbating the first problem).
This paper demonstrates that the effect of interest rate ceilings depends on the restrictions imposed by other financial regulations and visa versa, and that the effect of regulation, in turn, depends on the specifics of the loan transaction.
Interest rate ceilings on commercial bank deposit services were imposed during the 1930s and regulated by the Federal Reserve System.
Historically, special conditions, such as high startup costs and state-mandated rate ceilings, have stifled movements of credit card rates.
In addition, other concerns relating to possible politically motivated interference of the banking system, including but not limited to a distressed debt exchange by the government, directed lending, fees control, and interest rate ceilings, have diminished as these actions have either not taken place or done so in a watered-down form.
Similarly, reimposing deposit rate ceilings for less-than-well-capitalized banks runs the risk of distorting bank decisionmaking and creating exactly the inefficiencies that the Congress sought to remove through the Depository Institutions Deregulation Committee.
According to Kovnat, this resulted primarily from increased revenues on the SOCRATES research and development contracts, plus the government's acceptance of current overhead and G&A rates that were, in the past, limited by rate ceilings.
And the increased sensitivity to interest rates of household interest income, owing to the removal of deposit rate ceilings, and of household interest payments, owing to the growing share of adjustable-rate financial liabilities, may have had some bearing on consumption behavior.
In addition, some other concerns relating to possible politically motivated interference of the banking system, including but not limited to a distressed debt exchange by the government, retaliatory measures against institutions that supported the strike of early 2003, as well as directed lending and interest rate ceilings, have diminished as these actions have not materialized.
The congressional increase in the deposit insurance level in 1980 from \$40,000 to \$100,000 was intended to permit depository institutions to have access to deposits not subject to the rate ceilings then in force.

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