Interest Rate Ceiling

An interest rate ceiling also known as an interest rate cap is a regulatory measure that prevents banks or other financial institutions from charging more than a certain level of interest.

Interest rate ceiling. It is also called an interest rate cap. The setting of a maximum ceiling on interest or finance charges on credit card transactions is also in keeping with the country s current low interest rate environment diokno said. They are commonly used in variable rate loans such as arms.

An interest rate ceiling is a contractual provision outlining the maximum interest rate permitted for that transaction. The maximum interest rate that may be charged on a contract or agreement. At present the interest rate on the overnight reverse repurchase rrp facility remains at 2 25.

Interest rate caps and their impact on financial inclusion. 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. The first two groups are subject to the interest rate ceiling imposed on the segments 0 50uf and 50 200uf respectively while the third one is also affected by the interest rate ceiling of 0 50uf since it includes the largest range of affected individuals.

The estimates show a similar impact of the interest rate ceiling for all the three groups. An interest rate floor is an agreed upon rate in the lower range of rates associated with a floating rate loan product.