1. What is APOR Rate Spread?

The APOR (Average Prime Offer Rate) Spread represents the difference between a loan's Annual Percentage Rate (APR) and the APOR benchmark rate. This spread helps lenders and regulators assess whether a loan is higher-priced under various regulatory frameworks.

2. How Does the Calculator Work?

The calculator uses the APOR Rate Spread formula:

Where:

• \( APR \) — Annual Percentage Rate (%)
• \( APOR \) — Average Prime Offer Rate (%)

Explanation: The calculation is a simple subtraction that shows how much a loan's APR exceeds the benchmark APOR rate.

3. Importance of APOR Rate Spread

Details: The APOR spread is crucial for regulatory compliance, particularly under the Home Mortgage Disclosure Act (HMDA). It helps identify higher-priced mortgage loans that may require additional consumer protections and reporting.

4. Using the Calculator

Tips: Enter both APR and APOR as percentage values (without the % symbol). The calculator will compute the difference between these two rates.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a high APOR spread?
A: Generally, a spread of 1.5 percentage points or more for first-lien loans, or 3.5 percentage points for subordinate-lien loans, may classify a loan as higher-priced under HMDA rules.

Q2: How often is APOR updated?
A: APOR rates are typically updated weekly by the Federal Financial Institutions Examination Council (FFIEC) based on average rates offered by lenders.

Q3: Does APOR spread apply to all loan types?
A: APOR spread is primarily used for mortgage loans and is particularly important for home purchase loans, refinancings, and home improvement loans.

Q4: Why is APOR spread important for lenders?
A: Lenders use APOR spread to determine HMDA reporting requirements and to ensure compliance with regulations regarding higher-priced mortgage loans.

Q5: Can APOR spread be negative?
A: Yes, if the APR is lower than the APOR, the spread will be negative, indicating a loan priced below the average prime offer rate.