Capped rate mortgages are basically a mixture of the fixed rate and discount rate mortgage. A maximum interest rate is agreed for a set period of time but if the SVR drops below that rate you'll pay that lower amount. In other words the mortgage interest rate may fluctuate up and down below the specified rate, but may not go above it. Some capped mortgages will not only have a 'ceiling' but also a 'floor' between which the rate payable may move. These loans may be known as cap and collar mortgages.