In a recent announcement, Commissioner Greg Gonzales of the Tennessee Department of Financial Institutions declared that Tennesseans are now subject to a new maximum effective formula interest rate. Effective as of yesterday, the rate has been set at 11.50 percent per annum. This adjustment closely follows the Federal Reserve's reported weekly average prime loan rate of 7.50 percent on June 2, according to a press release from the Tennessee Department of Financial Institutions.
Explaining the recent change, Gonzales noted, "the rate remains in effect until the average prime loan rate as announced by the Federal Reserve Bank changes," as mentioned in the same press release. This indicates that borrowers in Tennessee can expect to quickly adapt to pay more or less as the prime rate fluctuates. The rate is calculated to always be a fixed 4 percent over the prime rate, a mechanism seemingly put in place to provide a measure of predictability for consumers and lenders alike.
Chapter 464, Public Acts of 1983, requires regular updates on interest rates. Gonzales’s announcement is part of the department’s duty to keep the public informed and ensure transparency about the state's financial situation. As the person in charge, Commissioner Gonzales will continue providing weekly updates.
For further information regarding the interest rate updates, Alicia Owen, Public Information Officer for the Tennessee Department Department of Financial Institutions, has made herself available for inquiries at (615) 289-4738.
