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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Spread


Synonyms:interest rate spread, rate spread
Filed Under: financial-banking, mortgages
Tags: banking, mortgage
 

Definition of spread

spread
1. The difference between the interest rate charged to borrowers and the interest rate paid to depositors.

Related Terms and Acronyms:

  • annual percentage rate (APR)   A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.
      ➥  A number used to compare costs associated with mortgage loans and other forms of financing.
  • bank   An institution that acts as a financial intermediary by receiving money from depositors and lenders and also lending to borrowers.
  • bank spread   The difference between the interest rate a bank charges a borrower and the interest rate a bank pays a depositor.
  • debtor   A person who has filed a petition for relief under the bankruptcy laws.
  • interest rate (IR)   The rate a lender charges an individual to borrow money.
  • lender   The bank or mortgage company offering the loan.
  • loan   Letting another party use something of value temporarily.
  • margin   The difference between the cost and the selling price.
  • point   A point equals 1 percent of a mortgage loan. Some lenders charge "origination points" to cover expenses of making a loan. Some borrowers pay "discount points" to reduce the loan's interest rate.
  • rate index   A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.

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