Interest Rate Ceiling

Filed Under »
Dictionary Says

Definition of 'Interest Rate Ceiling'

The maximum interest rate that a financial institution can charge a borrower for an adjustable rate mortgage or loan according to the contractual terms of the mortgage or loan. This interest rate is expressed as an absolute percentage. 
Investopedia Says

Investopedia explains 'Interest Rate Ceiling'

For example, the terms of the loan might state that the interest rate can never exceed 19%. 
An interest rate ceiling is sometimes used interchangeably with the term "lifetime interest rate cap". However, an interest rate cap is usually expressed as a maximum change allowed in an initial interest rate.

For example, a 5% interest rate cap would suggest that the interest rate on the borrower's loan can fluctuate within a 5% range during any specific rate adjustment period.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Stated Annual Interest Rate

    The return on an ...
  2. Interest Rate

    The amount ...
  3. Auction Rate Bond - ARB

    A debt security ...
  4. Loan

    The act of ...
  5. Loan Shark

    A person or ...
  6. Cox-Ingersoll-Ross Model - CIR

    A mathematical ...
  7. Variable Interest Rate

    An interest rate ...
  8. Adjustable-Rate Mortgage - ARM

    A type of ...
  9. Ceiling

    The maximum ...
  10. Interest Rate Floor

    An ...

Articles Of Interest

  1. Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  2. APR and APY: Why Your Bank Hopes You Can't Tell The Difference

    Banks use these rates to entice borrowers and investors. Find out what you're really getting.
  3. Find The Best Mortgage Rates

    Search and compare the best fixed and adjustable mortgage rates in your area with Bankrate.com.
  4. Common Liabilities That Hurt Your Net Worth

    Every penny that you keep out of the liability side of the net worth equation essentially ends up on the asset side.
  5. Profit From Mortgage Debt With MBS

    Mortgage-backed securities can offer monthly income, a fixed interest rate and even government backing.
  6. How Lender Overlays Prevent Mortgages

    Loan applications are increasingly being rejected because of lender overlays.
  7. Protect Your Personal Assets

    A family limited partnership (FLP) can go a long way toward securing your family's property.
  8. What You Should Know About Home Appraisals

    Home appraisals are an unbiased way to determine a home's value. Here is what you need to know about obtaining one.
  9. A Tax Primer For Homeowners

    Go beyond interest and find out how mortgage points affect your taxable income.
  10. Mortgage Points: What's The Point?

    Learn how to pay less for your home in the long run, or save in the short run.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center