IF THE LOAN APPLICATION DATE IS BEFORE OCTOBER 1, 2009 AND THE ACTION TAKEN DATE IS BEFORE JANUARY 1, 2010 USE THE OLD CALCULATOR.
The rate spread calculator generates the spread between the Annual Percentage Rate (APR) and a survey-based estimate of APRs currently offered on prime mortgage loans of a comparable type utilizing the “Average Prime Offer Rates- Fixed” and “Average Prime Offer Rates- Adjustable” tables, action taken, amortization type, lock-in date, APR, fixed term (loan maturity) or variable term (initial fixed-rate period), and lien status. Rate spread is a calculated field and is NOT simply the APR on the loan application. The reporting requirement applies to originations of: home purchase loans, dwelling-secured home improvement loans, and refinancings.
The calculator requires several components to successfully generate a rate spread for HMDA reporting. The required data include the action taken (provided), amortization type, lock-in date, annual percentage rate, fixed term (loan maturity) or variable term (initial fixed-rate period) and lien status.
A rate spread equal to 'NA' is a result of one or more data parameters that do not meet the specifications for reporting the rate spread. Data parameters that will result in a rate spread equal to 'NA' are listed below.
If these facts do not address your specific questions, please Contact Us. |
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The "Average Prime Offer Rates-Fixed" table is provided by the FFIEC for use in compliance with Regulation C (HMDA) and Regulation Z (TILA/HOEPA) amendments for loans with a fixed amortization effective October 1, 2009 and forward. The Average Prime Offer Rates-Fixed table is available in ASCII comma delimited format to view, print or download.
The average prime offer rates posted in the fixed table represent derived and estimated rates. The term ‘rates’ will be used consistently to represent the APRs in the “Average Prime Offer Rates” tables.
[ Top of page | Back to Rate Spread main ]The "Average Prime Offer Rates-Adjustable" table is provided by the FFIEC for use in compliance with Regulation C (HMDA) and Regulation Z (TILA/HOEPA) amendments for loans with an adjustable amortization effective October 1, 2009 and forward. The Average Prime Offer Rates-Adjustable table is available in ASCII comma delimited format to view, print or download.
The average prime offer rates posted in the adjustable table represent derived and estimated rates. The term ‘rates’ will be used consistently to represent the APRs in the “Average Prime Offer Rates” tables.
[ Top of page | Back to Rate Spread main ]The “Average Prime Offer Rates” tables will be updated and posted to the FFIEC web site every Thursday afternoon; however, the new benchmarks will be dated and effective the following Monday. The “most recently available” average prime offer rates are those most recently effective as of the date the loan’s rate is set.
There will be NO revisions to the “Average Prime Offer Rates” tables unless there is an error in a rate that is listed on one of the tables. If a revision to either table is necessary based on inaccurate information, a footnote will be placed on the FFIEC Rate Spread web site noting the date, time and nature of the update. A lender that determines the rate spread for a loan using an inaccurate rate contained in either table before the table is revised to correct the rate is not required to make a new determination for that loan after the revision has been made.
The “Average Prime Offer Rates” tables posted on this web site are a convenient source of rate data for calculating the rate spread for HMDA reporting purposes. Regulation C permits institutions to use the “Average Prime Offer Rates” contained in these tables instead of calculating their own rates by following the methodology statement below.
[ Top of page | Back to Rate Spread main ]Date: September 22, 2016
The calculation of average prime offer rates is based on survey data for four hypothetical mortgage products (the four products): (1) 30-year fixed-rate; (2) 15-year fixed-rate; (3) five-year variable-rate; and (4) one-year variable-rate[1]. The survey collects data for a hypothetical, “best quality,” 80% loan-to-value, first-lien loan. Both the five-year and one-year variable-rate products adjust to an index based on the one-year Treasury rate plus a margin and adjust annually after the initial, fixed-rate period. The Consumer Financial Protection Bureau (Bureau) makes available on the FFIEC website (https://www.ffiec.gov/ratespread/mortgagerates.htm) the survey data used to calculate APORs. This Methodology first describes all the steps necessary to calculate average prime offer rates and then provides a numerical example illustrating each step with the data from the week of May 19, 2008.
The survey collects nationwide average offer prices each week. For each loan type the average commitment loan rate and points are reported, with the points expressed as percentages of the initial loan balance. For the fixed-rate products, the commitment rate is the contract rate on the loan; for the variable-rate products, it is the initial contract rate. For the variable-rate products, the average margin is also reported.
The survey data are used to compute an annual percentage rate (APR) for the 30- and 15-year fixed-rate products. For the two variable-rate products, a weekly estimate of the fully-indexed rate (the sum of the index and margin) is calculated as the margin (collected in the applicable survey) plus the current one-year Treasury rate, which is estimated as the average of the close-of-business, one-year Treasury rates for Monday, Tuesday, and Wednesday of the survey week. If Treasury rate data are available for fewer than three days, only yields for the available days are used for the average. Survey data on the initial interest rate and points, and the estimated fully indexed rate, are used to compute a composite APR for the one- and five-year variable-rate mortgage products. See Regulation Z official commentary, 12 CFR part 1026, Supp. I, comment 17(c)(1)-10 (creditors to compute a composite APR where initial rate on variable-rate transaction not determined by reference to index and margin).
In computing the APR for the four products, a fully amortizing loan is assumed, with monthly compounding. A two-percentage-point cap on the annual interest rate adjustments is assumed for the variable-rate products. For the four products, the APR is calculated using the actuarial method, pursuant to appendix J to Regulation Z. A payment schedule is used that assumes equal monthly payments (even if this entails fractions of cents), assumes each payment due date to be the 1st of the month regardless of the calendar day on which it falls, treats all months as having 30 days, and ignores the occurrence of leap years. See 12 CFR 1026.17(c)(3). The APR calculation also assumes no irregular first period or per diem interest collected.
The survey data cover fixed-rate loans with terms to maturity of 15 and 30 years and variable-rate mortgages with initial, fixed-rate periods of one and five years. The Bureau uses interpolation techniques to estimate APRs for ten additional products (two-, three-, seven-, and ten-year variable-rate loans and one-, two-, three-, five-, seven-, and ten-year fixed-rate loans) to use along with the four directly surveyed products.
The Treasury Department makes available yields on its securities with terms to maturity of, among others, one, two, three, five, seven, and ten years (see http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml). The Bureau uses these data to estimate APRs for two-, three-, seven-, and ten-year variable-rate mortgages. These additional variable-rate products are assumed to have the same terms and features as the surveyed one- and five-year variable-rate products other than the length of the initial, fixed-rate period.
The margin and points for the two- and three-year variable-rate products are estimated as weighted averages of the margins and points of the one-year and five-year variable-rate products. For the two-year variable-rate loan the weights are 3/4 for the one-year variable-rate and 1/4 for the five-year variable-rate. For the three-year variable-rate product, the weights are 1/2 each for the one-year and the five-year variable rate. For the seven- and ten-year variable-rate products, because they fall outside of the range between the one- and five-year surveyed variable-rate products, the margin and points of the five-year variable-rate product reported in the survey are used instead of calculating a weighted average.
The initial interest rate for each of the interpolated variable-rate products is estimated by a two-step process. First, “Treasury spreads” are computed for the two- and three-year variable-rate loans as the weighted averages of the spreads between the initial interest rates on the one- and five-year surveyed variable-rate products and the one- and five-year Treasury yields, respectively. The weights used are the same as those used in the calculation of margins and points. For seven- and ten-year variable-rate loans, because they fall outside of the range between the one- and five-year surveyed variable-rate products, the spread between the initial interest rate on the five-year variable-rate product and the five-year Treasury yield is used as the Treasury spread instead of calculating a weighted average. The second step is to add the appropriate Treasury spread to the Treasury yield for the appropriate initial, fixed-rate period. All Treasury yields used in this two-step process are the Monday-Wednesday close-of-business averages, as described above. Thus, for example, for the two-year variable-rate product the estimated, two-year Treasury spread is added to the average two-year Treasury rate, and for the ten-year variable-rate product the five-year Treasury spread is added to the average ten-year Treasury rate.
Thus estimated, the initial rates, margins, and points are used to calculate a fully-indexed rate and ultimately an APR for the two-, three-, seven-, and ten-year variable-rate products. To estimate APRs for one-, two-, three-, five-, seven-, and ten-year fixed-rate loans, respectively, the Bureau uses the initial interest rates and points, but not the fully-indexed rates, of the one-, two-, three-, five-, seven-, and ten-year variable-rate loan products calculated above.
For any loan for which an APR of the same term to maturity or initial, fixed-rate period, as applicable, (collectively, for purposes of this paragraph, “term”) is not included among the 14 products derived or estimated from the survey data by the calculations above, the comparable transaction is identified by the following assignment rules: For a loan with a shorter term than the shortest applicable term for which an APR is derived or estimated above, the APR of the shortest term is used. For a loan with a longer term than the longest applicable term for which an APR is derived or estimated above, the APR of the longest term is used. For all other loans, the APR of the applicable term closest to the loan’s term is used; if the loan is exactly halfway between two terms, the shorter of the two is used. For example: For a loan with a term of eight years, the applicable (fixed-rate or variable-rate) seven-year APR is used; with a term of six months, the applicable one-year APR is used; with a term of nine years, the applicable ten-year APR is used; with a term of 11 years, the applicable ten-year APR is used; and with a term of four years, the applicable three-year APR is used. For a fixed-rate loan with a term of 16 years, the 15-year fixed-rate APR is used; and with a term of 35 years, the 30-year fixed-rate APR is used.
The four APRs derived directly from data for the four products, the ten additional APRs estimated from survey data in the manner described above, and the APRs determined by the foregoing assignment rules are the average prime offer rates for their respective comparable transactions. The survey data needed for the above calculations generally are available on the FFIEC’s website on Thursday of each week. APRs representing average prime offer rates derived, estimated, or determined as above are posted in tables on the FFIEC Web site the following day. Those average prime offer rates are effective beginning the following Monday and until the next posting takes effect.
Numerical Example:
The week of May 19 through 25, 2008 is used to illustrate the average prime offer rate calculation Methodology. On Thursday May 15, the following survey data reflecting national mortgage rate averages for the three day period May 12 through May 14 (each variable is expressed in percentage points) were released:
30-year fixed-rate: | |
---|---|
Contract rate | 6.01 |
Points | 0.6 |
15-year fixed-rate: | |
Contract rate | 5.60 |
Points | 0.5 |
Five-year variable-rate: | |
Initial rate | 5.57 |
Points | 0.6 |
Margin | 2.75 |
One-year variable-rate: | |
Initial rate | 5.18 |
Points | 0.7 |
Margin | 2.75 |
The survey contract rate and points for the 30-year and 15-year fixed-rate mortgages are used to compute APRs for these two products:
30-year fixed-rate | 6.07 |
15-year fixed-rate | 5.68 |
As a preliminary step in calculating APRs for the one-year and five-year variable-rate products, average close-of-business Treasury yields for the three days in which the survey was conducted are calculated (the three yields summed before dividing by three are the close-of-business yields reported for May 12th, 13th, and 14th):
One-year Treasury | (2.01+2.08+2.11)/3=2.07 |
Two-year Treasury | (2.30+2.57+2.53)/3=2.43 |
Three-year Treasury | (2.54+2.70+2.78)/3=2.67 |
Five-year Treasury | (3.00+3.17+3.22)/3=3.13 |
Seven-year Treasury | (3.34+3.49+3.50)/3=3.44 |
Ten-year Treasury | (3.78+3.90+3.92)/3=3.87 |
The fully-indexed rate for the one-year variable-rate mortgage is calculated as the one-year Treasury yield plus the margin: 2.07+2.75=4.82
Because both variable-rate products in the survey data use the same margin, the fully-indexed rate for the five-year variable-rate mortgage is the same number: 2.07+2.75=4.82 (since each adjusts to the 1-year treasury).
The initial rate, points, and fully-indexed rate are used to compute APRs for the one-year and five-year variable-rate products:
One-year variable-rate | 4.91 |
Five-year variable-rate | 5.16 |
Data for the interpolated two-year and three-year variable-rate mortgages are calculated as weighted averages of the figures for the one- and five-year variable-rates, which are used in conjunction with the yields on the two- and three-year Treasuries as follows:
Two-year variable-rate: | |
---|---|
Initial rate | [3x(5.18-2.07)+1x(5.57-3.13)]/4+2.43=5.37 |
Points | [3x.7+1x.6]/4=.7 |
Margin | [3x2.75+1x2.75]/4=2.75 |
Fully-indexed rate | 2.07+2.75=4.82 |
Three-year variable-rate: | |
Initial rate | [2x(5.18-2.07)+2x(5.57-3.13)]/4+2.67=5.45 |
Points | [2x.7+2x.6]/4=.7 |
Margin | [2x2.75+2x2.75]/4=2.75 |
Fully-indexed rate | 2.07+2.75=4.82 |
The foregoing initial rates, points, margins, and fully-indexed rates are used to calculate APRs for the two- and three-year variable-rate products:
Two-year variable-rate | 4.97 |
Three-year variable-rate | 5.03 |
Data for the seven-year and ten-year variable-rate products are estimated using the survey data for the five-year variable-rate product and yields on the seven- and ten-year Treasuries:
Seven-year variable-rate: | |
---|---|
Initial rate | (5.57-3.13)+3.44=5.88 |
Points | =.6 |
Margin | =2.75 |
Fully-indexed rate | 2.07+2.75=4.82 |
Ten-year variable-rate: | |
Initial rate | (5.57-3.13)+3.87=6.31 |
Points | =.6 |
Margin | =2.75 |
Fully-indexed rate | 2.07+2.75=4.82 |
The foregoing initial rates, points, margins, and fully-indexed rates are used to calculate APRs for the seven- and ten-year variable-rate products:
Seven-year variable-rate | 5.40 |
Ten-year variable-rate | 5.85 |
The initial rate and points of the variable-rate mortgages calculated above are used to estimate APRs for fixed-rate products with terms to maturity of ten years or less:
One-year fixed: | |
---|---|
Initial rate | 5.18 |
Points | .7 |
APR | 6.49 |
Two-year fixed: | |
Initial rate | 5.37 |
Points | .7 |
APR | 6.06 |
Three-year fixed: | |
Initial rate | 5.45 |
Points | .7 |
APR | 5.92 |
Five-year fixed: | |
Initial rate | 5.57 |
Points | .6 |
APR | 5.82 |
Seven-year fixed: | |
Initial rate | 5.88 |
Points | .6 |
APR | 6.06 |
Ten-year fixed: | |
Initial rate | 6.31 |
Points | .6 |
APR | 6.44 |
[1]The “30-year” and “15-year” fixed-rate product designations refer to those products’ terms to maturity. The “one-year” and “five-year” variable-rate product designations, on the other hand, refer to those products’ initial, fixed-rate periods. All variable-rate products discussed in this Methodology have 30-year terms to maturity.
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Step 1
From the NEW FFIEC Rate Spread Calculator page, enter the following information from the loan application documents:
(see 'Data Requirements for the Rate Spread Calculator' for more information on data thresholds)
If the data entered contains errors or does not meet the required file specifications, an error message to the right of the field will notify the user after choosing 'Submit'. The data must be corrected to calculate a valid rate spread.
Step 2
Click "Submit" to calculate the rate spread for the loan application data entered.
Step 3
The rate spread will be calculated and provided on the front page in percentage-point format, four numerical characters and the decimal point or 'NA' if appropriate. The calculated rate spread should be entered on the HMDA LAR, including all leading and trailing zeros. For example, a calculated rate spread of 3.5 percentage points should be entered on the HMDA LAR as 03.50. A rate spread equal to 'NA' should be entered as 'NA', left justified.
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]
Step 1
From the NEW FFIEC Rate Spread Calculator page, choose the "batch rate spread calculator" link from within the main paragraph.
Step 2
Enter the following information from the loan application documents for a maximum of 10 loans at one time:
(see 'Data Requirements for the Rate Spread Calculator' for more information on data thresholds)
If the data entered contains errors or does not meet the required file specifications, an error message below the field will notify the user after clicking the "Submit" button.
Step 3
Click "Submit" to calculate the rate spread for the loan application data entered.
The rate spread will not be calculated for data containing errors in formatting or data that do not meet the file specifications. The data must be corrected and the user must "Submit" the data again to receive a valid rate spread.
Step 4
The rate spread will be calculated and provided in the Rate Spread box following Lien Status. The rate spread will be provided in percentage-point format, four numerical characters and the decimal point or 'NA' if appropriate. The calculated rate spread for each Record ID should be entered on the HMDA LAR, including all leading and trailing zeros. For example, a calculated rate spread of 3.5 percentage points should be entered on the HMDA LAR as 03.50. A rate spread equal to 'NA' should be entered as 'NA', left justified.
[ Top of page | Back to Rate Spread main ]HMDA Reporting Questions
If you have a question regarding the rate spread calculator, HMDA reporting or cannot locate a particular item of interest, please email HMDAHELP@frb.gov.
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Last Modified: 09/19/2016