Those in the market for a new home, brace yourselves for some critical financial news. The Tennessee Department of Financial Institutions has just declared that as of August 2025, the max cap on interest rates for home loans will be 10.67% annually. This news came directly from the department's latest statement, which outlines the updated rate settings as prescribed by Public Chapter 290 of the General Assembly this year.
The highest rate for home loan interest in Tennessee is set to be adjusted to four percentage points above the Average Prime Offer Rate (APOR), as outlined in 12 CFR 1026.35. The Federal Financial Institutions Examination Council (FFIEC) recently reported the APOR at 6.67%, resulting in a maximum allowable interest rate of 10.67% annually, effective August 2025.
The Tennessee Department of Financial Institutions stated that changes to home loan interest rates will be subject to existing federal regulations, including the Depository Institutions Deregulation and Monetary Control Act of 1980 and rules established by the former Federal Home Loan Bank Board. These regulations, which supersede certain state usury laws after March 1980, remain applicable to home financing arrangements within the state.
For more detailed inquiries, Alica Owen, the Public Information Officer for the Tennessee Department of Financial Institutions, is the point of contact at (615) 289-4738. The department's announcement, where such details around the revised home loan rates were shared and which can be viewed through the Department of Financial Institutions' official release, arrives in a season where economic variables have homeowners and financial institutions alike in a state closely watching indicators for future planning and stability.
