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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 ?
They suggest that the Fed's refusal to lift usury ceilings may have been "an attempt to approximate an ex ante efficient contract.
Similarly, usury ceilings in the past resulted in the non-availability of credit to high risk borrowers whenever such ceilings were lower that the rates free markets would have fixed.
Home buyers, especially in states that imposed usury ceilings on loans, found it increasingly difficult to secure mortgages.
Loan terms--such as fee limitations, interest usury ceilings, permissible accrual methods, late fee and grace period provisions, and prepayment penalty restrictions--are not only addressed, but treated appropriately based on how parties are licensed or chartered, as well as according to the transaction type.
By treating their contracts as leases rather than installment sales or small loans, consumer advocates say, they avoid complying with usury ceilings and laws that require interest rates to be disclosed, such as the Truth in Lending Act.