interest rate spread

Definition

The amount by which the interest earned by an investment exceeds or fails to exceed its own interest liability. If a bank pays depositors one interest rate, and lends the deposited money out at a higher interest rate, the difference between those two interest rates is the interest rate spread.

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The interest rate spread was really interesting to me and I realized that it was a really hard thing to understand.

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Since the bank was paying half a percent to depositors, the interest rate spread for mortgages was about four percent.

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interest rate spread The amount by which the interest EARNED by an investment exceeds or fails to exceed its own interest liability. If a bank pays depositors one interest rate, and lends the DEPOSITED money out at a higher interest rate, the difference between those two interest rates is the interest rate spread.

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