What is a basis point?
- Definition
- A basis point (bps) is a unit that is equal to 1/100th of 1%, in other words one basis point is equal to 0.01%, similarly a 1% change is equal to a 100 basis point change.
In real estate, basis points are often used to measure fees or changes in interest rates which often are less than 1%. For example, if an interest rate of 5.00% increases by 50 basis points, the new rate is 5.50%. Similarly, a fee of 1.25% could be described as 125 basis points.
