If the variable rate on a similar loan goes above the capped rate, the capped rate loan holder gets the benefit of not having to pay the extra portion. While this is a benefit, capped rate loans can have higher interest rates than a traditional fixed rate loan.
Investment dictionary. Academic. 2012.
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capped rate — ➔ rate1 * * * capped rate UK US noun [C] ► FINANCE, PROPERTY an interest rate on a loan that will not rise above an agreed rate for an agreed period of time: »A capped rate guarantees your mortgage will not rise above a certain level … Financial and business terms
capped-rate — UK US adjective [before noun] ► FINANCE, PROPERTY a capped rate loan is one with an interest rate that will not rise above an agreed rate for an agreed period of time: »a capped rate mortgage/loan »If the home buyer wants security against rising… … Financial and business terms
capped rate — /ˌkæpt reɪt/ verb a mortgage rate which is guaranteed not to go above a certain level for a set period of time, although it can move downwards … Dictionary of banking and finance
capped-rate mortgage — ➔ mortgage1 … Financial and business terms
rate — The cost of debt service paid by a borrower or issuer to a lender or investor. The rate is expressed as an annual percentage of the amount borrowed. For some notes and bonds that pay interest semiannually, the semiannual interest due to the… … Financial and business terms
rate-cap — rate caps, rate capping, rate capped 1) VERB: usu passive In Britain, when a local council was rate capped, the government prevented it from increasing local taxes called rates, in order to force the council to reduce its spending or make it more … English dictionary
capped floating-rate note — capped FRN See: floating rate note … Accounting dictionary
capped FRN — capped floating rate note … Accounting dictionary
capped floating rate note — /ˌkæpt fləυtɪŋ reɪt ˌnəυt/ noun a floating rate note which has an agreed maximum rate … Dictionary of banking and finance
Capped Note — A floating rate instrument with a cap that places a maximum coupon rate on the issue. ► See also Cap … Financial and business terms