Margin
Definition
- The difference between the cost and the selling price of a product or service. Also known as "profit margin."
- The amount (expressed as percentage points) that a lender adds to an index to arrive at the final interest rate. For example, if the index is 7 percent and the margin 2.75 percent, the final interest rate is 9.75 percent.
Synonyms
profit margin, surplus, differential
Alternate Spellings
profit margin
Related Terms and Acronyms
- Basis Point (BPS) — Acronym, Very Important,
- A unit of measure: 1/100th of one percent. For example, the difference between a 9.0% loan and a 9.5% loan is 50 basis points.
➥ Used by mortgage brokers and lenders when discussing mortgage rates and determining commissions. - Buy-down — Definition,
- When a borrower or a mortgage broker "buys down" a mortgage rate, they make an upfront payment to the lender in order to lower the mortgage rate. A similar effect can be achieved by making a lump sum payment at the beginning of a mortgage term.
- Buy-down Mortgage — Definition, Important,
- A home loan in which the lender charges below-market interest in exchange for discount points.
- Net Interest Margin (NIM) — Acronym,
- Net interest income (the difference between interest income and interest expense) as a percentage of average total assets.
- Participation Rate — Definition,
- The rate at which changes in a stock index affect the profit credited to an annuity.
- Spread — Definition,
- The difference between the interest rate charged to borrowers and the interest rate paid to depositors.
