The Tennessee Department of Financial Institutions, under the leadership of Commissioner Greg Gonzales, has declared a new maximum effective formula rate of interest. As of May 7, 2024, the rate will stand at 12.50 percent per annum. This adjustment is directly tied to the current weekly average prime loan rate, which the Federal Reserve reported to be 8.50 percent on May 6, 2024.
The methodology for setting this new rate includes adding a 4 percent margin to the weekly average prime loan rate. Thus, with the prime rate at 8.50 percent, the additional margin brings the maximum rate to the announced 12.50 percent. Commissioner Gonzales emphasized that this rate would remain in place until there is a change in the prime loan rate as published by the Federal Reserve Bank.
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This decision is in accordance with Chapter 464, Public Acts of 1983, a piece of legislation that mandates the commissioner of Financial Institutions in Tennessee to update and announce the formula rate of interest on a weekly basis. This law ensures that the interest rates within the state remain responsive to changes in the broader financial environment, specifically adjustments in the prime loan rate set by the Federal Reserve.
For more information regarding this announcement or any inquiries about the formula rate of interest, individuals are encouraged to contact the Tennessee Department of Financial Institutions. Alica Owen, serving as the Public Information Officer, is available for contact at (615) 289-4738 to provide further details and address any questions.
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Tennessee Sets New Interest Rate for Home Loans in 2024
The Tennessee Department of Financial Institutions, led by Commissioner Gonzales, has announced a new maximum effective interest rate of 8.73% per annum for home loans in June 2024, adjusting according to the General Assembly’s 1987 mandate and based on market yields on long-term government bonds.