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HB0908 • 2026

Interest Rates

AN ACT to amend Tennessee Code Annotated, Title 45 and Title 47, relative to interest on home loans.

Housing
Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor
Garrett, Yager
Last action
2025-04-28
Official status
Effective date(s) 07/01/2025
Effective date
Not listed

Plain English Breakdown

The bill text specifies a limit on the maximum effective rate of interest, but it was already included in the official summary and does not need repetition.

Setting Interest Rates for Home Loans

This bill changes how Tennessee sets the maximum interest rate allowed on home loans by replacing old methods with a new one based on the average prime offer rate.

What This Bill Does

  • Removes current rules that set the maximum interest rate for home loans based on the Federal National Mortgage Association's auction or long-term government bonds.
  • Sets a new rule where the maximum interest rate is four percentage points above the average prime offer rate for a 30-year fixed loan, as defined by federal law.

Who It Names or Affects

  • Home loan borrowers in Tennessee
  • Financial institutions that provide home loans

Terms To Know

average prime offer rate
The interest rate banks and other financial institutions offer to their most creditworthy customers for a specific type of loan, such as a 30-year fixed mortgage.
Federal National Mortgage Association (FNMA)
A government-sponsored enterprise that buys mortgages from lenders to provide liquidity in the housing market.

Limits and Unknowns

  • The bill does not specify how it will be enforced or monitored.
  • It is unclear what happens if the federal financial institutions examination council stops publishing the average prime offer rate.

Bill History

  1. 2025-04-28 Tennessee General Assembly

    Effective date(s) 07/01/2025

  2. 2025-04-28 Tennessee General Assembly

    Pub. Ch. 290

  3. 2025-04-28 Tennessee General Assembly

    Comp. became Pub. Ch. 290

  4. 2025-04-24 Tennessee General Assembly

    Signed by Governor.

  5. 2025-04-16 Tennessee General Assembly

    Transmitted to Governor for his action.

  6. 2025-04-14 Tennessee General Assembly

    Signed by Senate Speaker

  7. 2025-04-10 Tennessee General Assembly

    Signed by H. Speaker

  8. 2025-04-08 Tennessee General Assembly

    Enrolled; ready for sig. of H. Speaker.

  9. 2025-04-07 Tennessee General Assembly

    Passed Senate, Ayes 24, Nays 5, PNV 1

  10. 2025-04-04 Tennessee General Assembly

    Placed on Senate Regular Calendar for 4/7/2025

  11. 2025-03-20 Tennessee General Assembly

    Senate Reset on calendar for 4/7/2025

  12. 2025-03-18 Tennessee General Assembly

    Placed on Senate Regular Calendar for 3/20/2025

  13. 2025-03-17 Tennessee General Assembly

    Senate Reset on calendar for 3/20/2025

  14. 2025-03-17 Tennessee General Assembly

    Senate substituted House Bill for companion Senate Bill.

  15. 2025-03-17 Tennessee General Assembly

    Companion House Bill substituted

  16. 2025-03-14 Tennessee General Assembly

    Placed on Senate Regular Calendar for 3/17/2025

  17. 2025-03-11 Tennessee General Assembly

    Recommended for passage, refer to Senate Calendar Committee

  18. 2025-03-06 Tennessee General Assembly

    Received from House, Passed on First Consideration

  19. 2025-03-05 Tennessee General Assembly

    Placed on Senate Commerce and Labor Committee calendar for 3/11/2025

  20. 2025-03-04 Tennessee General Assembly

    Engrossed; ready for transmission to Sen.

  21. 2025-03-04 Tennessee General Assembly

    Action deferred in Senate Commerce & Labor Committee to 3/11/2025

  22. 2025-03-03 Tennessee General Assembly

    Passed H., Ayes 90, Nays 0, PNV 0

  23. 2025-02-27 Tennessee General Assembly

    H. Placed on Consent Calendar for 3/3/2025

  24. 2025-02-26 Tennessee General Assembly

    Placed on cal. Calendar & Rules Committee for 2/27/2025

  25. 2025-02-26 Tennessee General Assembly

    Rec. for pass; ref to Calendar & Rules Committee

  26. 2025-02-25 Tennessee General Assembly

    Placed on Senate Commerce and Labor Committee calendar for 3/4/2025

  27. 2025-02-25 Tennessee General Assembly

    Placed on Senate Commerce and Labor Committee calendar for 3/4/2025

  28. 2025-02-25 Tennessee General Assembly

    Action deferred in Senate Commerce and Labor Committee to 3/4/2025

  29. 2025-02-19 Tennessee General Assembly

    Placed on cal. Commerce Committee for 2/26/2025

  30. 2025-02-19 Tennessee General Assembly

    Rec. for pass by s/c ref. to Commerce Committee

  31. 2025-02-18 Tennessee General Assembly

    Placed on Senate Commerce and Labor Committee calendar for 2/25/2025

  32. 2025-02-12 Tennessee General Assembly

    Placed on s/c cal Banking & Consumer Affairs Subcommittee for 2/19/2025

  33. 2025-02-12 Tennessee General Assembly

    Passed on Second Consideration, refer to Senate Commerce and Labor Committee

  34. 2025-02-10 Tennessee General Assembly

    Assigned to s/c Banking & Consumer Affairs Subcommittee

  35. 2025-02-10 Tennessee General Assembly

    Introduced, Passed on First Consideration

  36. 2025-02-06 Tennessee General Assembly

    P2C, ref. to Commerce Committee

  37. 2025-02-05 Tennessee General Assembly

    Intro., P1C.

  38. 2025-02-04 Tennessee General Assembly

    Filed for introduction

  39. 2025-02-04 Tennessee General Assembly

    Filed for introduction

Official Summary Text

Present law provides that the maximum effective rate of interest per annum for
home loans is set at an amount equal to two percentage points above the most recent weighted average yield of the accepted offers of the Federal National Mortgage Association's current free market system auction for commitments to purchase conventional h
o
me mortgages (FNMA Auction). In the event the Federal National Mortgage Association discontinues the conduct of the auction, the maximum effective rate of interest per annum for home loans must be set at an amount equal to four percentage points above th
e
index of market yields of long term government bonds adjusted to a 30-year maturity by the department of the treasury.

This bill removes all of the above provisions and, instead, requires the maximum effective rate of interest per annum for home loans
to be set at an amount equal to four percentage points above the average prime offer rate, as defined in federal law, that applies to a 30-year fixed loan, as published by the federal financial institutions examination council, or its successor federal e
n
tity.

ON MARCH 17, 2025, THE SENATE SUBSTITUTED HOUSE BILL 908 FOR SENATE BILL 749 AND RESET HOUSE BILL 908.

ON APRIL 7, 2025, THE SENATE FURTHER CONSIDERED AND PASSED HOUSE BILL 908.

Current Bill Text

Read the full stored bill text 
SENATE BILL 749
By Yager

HOUSE BILL 908
By Garrett

HB0908
001335
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 45
and Title 47, relative to interest on home loans.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 47-15-102, is amended by deleting
the section and substituting:
(a) Except as provided in subsection (b), the maximum effective rate of interest
per annum for home loans shall be set at an amount equal to four (4) percentage points
above the average prime offer rate, as defined in 12 CFR 1026.35, that applies to a
thirty-year fixed loan, as published by the federal financial institutions examination
council, or its successor federal entity.
(b) The maximum effective rate of interest per annum for home loans shall not
exceed eighteen percent (18%) per annum.
SECTION 2. This act takes effect July 1, 2025, the public welfare requiring it.