In a significant announcement from the Tennessee Department of Financial Institutions, Commissioner Gonzales has declared a new maximum effective rate of interest for home loans. This change comes into effect for April 2024, setting the cap at 8.39 percent per annum. This adjustment follows the discontinuation of the Federal National Mortgage Association’s free market auction system for commitments to purchase conventional home mortgages.
This decision is grounded in legislation passed by the General Assembly in 1987, Public Chapter 291, which predicates the maximum interest rate on the index of market yields of long-term government bonds, as adjusted to a thirty-year maturity by the U.S. Department of the Treasury. The most recent weekly average statistical data available has led to a calculated rate of 4.39 percent, with the final rate being four percentage points higher.
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The announcement also advises individuals affected by this new rate to seek legal counsel regarding the impact of the Depository Institutions Deregulation and Monetary Control Act of 1980 and subsequent amendments and regulations. This is particularly important as state usury laws for loans made after March 31, 1980, may be overridden by this federal act.
This development marks a significant move in the landscape of home financing, potentially affecting a large number of prospective home buyers and existing homeowners looking to refinance. The Tennessee Department of Financial Institutions encourages those with concerns or questions regarding how this change might impact their financial decisions or loan agreements to reach out for more information or consult with a legal expert.
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