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Average Prime Offer Rate (APOR) is a survey-based estimate of Annual Percentage Rates (APRs) currently offered on prime mortgage loans. The rates are published for Fixed Rate Mortgages (FRM) and Adjustable Rate Mortgages (ARM) and are available for yearly maturities ranging from 1 year to 50 years.
APOR is calculated and published weekly by Federal Financial Institutions Examination Council's (FFIEC) and is available on their website at Average Prime Offer Rates Tables.
APOR is used to calculate Rate Spread for HMDA reporting purposes and to determine whether the loan is a higher priced mortgage loan (HPML) under Regulation Z.
Regulation Z (12 CFR 1026.35(a)(2)), defines APOR as: "Average prime offer rate" means an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions that have low-risk pricing characteristics.
Average Prime Offer Rate is based on average interest rates, fees, and other terms on prime mortgages. Prime mortgages are loans that are to highly qualified borrowers. FFIEC calculates APOR by using the data obtained from multiple sources which includes:
A mortgage loan, secured by primary residence, is considered a higher priced mortgage loan (HPML) if the APR of the loan is higher than the APOR by a certain percentage. This is based on the type of the loan as below:
|Type of Loan||Loan is an HPML if|
|APOR – APR → 1.5%|
|APOR – APR → 2.5%|
|APOR – APR → 3.5%|
HPMLs are subject to additional appraisal and escrow requirements under Regulation Z (12 CFR 1026.35)
APOR is used to calculate Rate Spread which is a Home Mortgage Disclosure Act (HMDA) data field. Rate spread is the difference between the APR and APOR based on action taken, amortization type (FRM/ARM), lock-in date, APR, maturity term (use loan maturity for FRM or initial fixed-rate period for ARM), and lien status.
Rate Spread is reported in the HMDA LAR if the rate spread is equal to or greater than 1.5 percentage points for first-lien loans or 3.5 percentage points for subordinate-lien loans. Also, rate spread is only calculated if the loan is a home-purchase loan, a refinancing, or a dwelling-secured home improvement loan. Refer to HMDA rules for additional details on HMDA reporting requirements for Rate Spread.
Updated: Aug 20, 2018