# 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.

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 ?
Soon after credit card banks began to export rates, many states, fearing the loss of banking business, raised or eliminated their usury ceilings. In 1975, only 3 states had no usury ceilings, and another 10 had ceilings above 15 percent on loans to individuals.
This perception of an actual or potential "no" response easily slides into a perception of market power on the part of the bank (thereby justifying limits on size, usury ceilings, must serve requirements, etc.(18))--even though there are good reasons (rooted in the problems of "asymmetric information") why even competitive bankers would need to say no to some would-be customers.(19)
Consumers, though, found credit less available because binding usury ceilings resulted in nonprice rationing of consumer credit.
Similarly, when market rates went above usury ceilings, marginal borrowers were not able to get any credit at all.
In most states, rent-to-own contracts are exempt from usury ceilings. Rent-to-own contracts have been criticized for their allegedly high interest rates implicit in the payment stream.
We are not seeing symptoms of that kind of widespread, classic crunch, as in the past when deposit rate ceilings or usury ceilings limited the market's ability to adjust and forced cutoffs of credit.

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