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Glossary of Notary Public, Mortgage, Signing Agent, and Loan Signing Terms.

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Common Terms 1   Common Terms 2

Basis Point

Phonetics: ba·sis point    \'bāsəs\    \'pȯint\

Function: noun

Definition 1:
A basis point is 1/100th of a percentage point. For example, a fee calculated as 50 basis points of a loan amount of $100,000 would be 0.50% or $500. A basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security. A basis point can be abbreviated as BPS. So, a bond whose yield increases from 6% to 6.4% is said to increase by 40 basis points; or an interest rate that has risen 1% can be said to have increased by 100 basis points.