New Maximum Interest Rate for Home Loans Announced

The Federal National Mortgage Association has announced the discontinuation of its free market auction system for commitments to purchase conventional home mortgages. In response, Commissioner Gonzales of the Financial Institutions has declared that the maximum effective interest rate for home loans in December 2024 will be 8.52 percent per annum. This rate is determined by the General Assembly’s 1987 legislation, Public Chapter 291. It is calculated as four percentage points above the index of market yields on long-term government bonds, adjusted to a 30-year maturity by the U.S. Department of the Treasury. The most recent data available prior to this announcement indicates a calculated rate of 4.52 percent.

Individuals affected by the new interest rate are advised to seek legal counsel to understand the implications of the Depository Institutions Deregulation and Monetary Control Act of 1980 (P.L. 96-221, amended by P.L. 96-399), as well as regulations established by the Federal Home Loan Bank Board. This Act may preempt state usury laws for certain loans made after March 31, 1980. For further information, please contact Alica Owen, Public Information Officer at the Tennessee Department of Financial Institutions, at (615) 289-4738.