This paper is for purposes of guidance only, and is not intended as a substitute for legal advice in particular cases. Interest Rate Hedging Products Interest rate hedging products (IRHPs) are products sold by banks to customers for the purpose of providing protection against fluctuations in interest rates. IRHPs are typically separate from the loans to which they relate.
There are broadly four types of IRHP: Swaps - which enable customers to fix their interest rate.
- Caps - which place a limit on any interest rate rises.
- Collars - which enable customers to limit interest rate fluctuations to within a simple range.
- Structured collars - which enable customers to limit interest rate fluctuations tp within a specified range, but where, if the reference interest rate falls below the bottom of the range the interest rate payable by the customer may increase above the bottom of the range.
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