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HB 908

Interest Rates - As enacted, removes the weighted average yield of the accepted offers of the Federal National Mortgage Association's current free market system auction and the 30-year treasury yield as the two bases upon which the maximum effective rate of interest on home loans may be set by the commissioner of financial institutions, and replaces them with the average prime offer rate. - Amends TCA Title 45 and Title 47.

114th Regular Session (2025-2026) Introduced by Johnny Garrett

Tennessee replaces mortgage rate benchmarks with Average Prime Offer Rate, simplifying interest rate caps set by the state financial institutions commissioner.

Pub. Ch. 290
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Bill Summary · HB 908

Legislative bill overview

HB 908 changes how Tennessee's Commissioner of Financial Institutions sets maximum interest rates for home loans. Instead of using two complex market-based benchmarks (Fannie Mae auction yields and 30-year Treasury yields), the state will now use the Average Prime Offer Rate (APOR)—a simpler, more standardized measure derived from mortgage lender pricing data.

Why is this important

This change affects mortgage lending regulations statewide and could influence borrowing costs for Tennessee homebuyers. The shift to APOR standardizes rate-setting with a metric already widely used in federal mortgage regulations, potentially simplifying compliance for lenders. However, the actual impact on consumers depends on how APOR typically compares to the previous benchmarks in different market conditions.

Potential points of contention

  • Market volatility differences: APOR may respond differently to market conditions than Fannie Mae auction yields or Treasury rates, potentially creating periods where the new cap allows higher or lower rates than before
  • Consumer protection clarity: Unclear whether this simplification better protects borrowers or primarily benefits lenders by reducing regulatory complexity
  • Implementation transition: The July 1, 2025 effective date gives limited time for the financial institutions sector to adjust systems and processes

Compiled from official sources — confirm details with the bill’s official record.

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