BOARD00463

• Board Meeting Date: 11/25/1996
• Description: Agenda or Table of Contents, Minutes, Memos
• Board Meetings - Doc Type: Meeting

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sponsor's service area. Lending rates for agricultural projects will be identical to municipal low -
income rates and rates for commercial projects will be identical to municipal high-income rates.

For projects recommended in 1996, the Board used the following procedure in setting rates for
different lending categories:

For municipal low-income areas, where median household income (MHI) is less than 80
percent of the state-wide MHI, the lending rate was set at 20 percent less than the
Standard Rate. This same rate was used for agricultural projects.

For municipal high-income areas, where the MHI is more than 110 percent of the state-
wide MHI, the lending rate was 10 percent higher than the Standard rate. The same rate
was used for commercial loans.

This procedure would result in the following set of 3D-year lending rates for 1997:

TABLE 1. RECOMMENDED 3D-YEAR LENDING RATES FOR 1997

Tvne Low Income Standard Income Hiah Income
Municinal 3.75% 4.75% 5.25%
~nricultural 3.75%
Commercial 5.25%

For comparison, the 3D-year lending rates for 1996 are given in Table 2. As the two tables show,
the recommended rates for 1997 would result in a one-half of one percent rate decrease for all
categories of loans.

TABLE 2. 3D-YEAR LENDING RATES FOR 1996

Tvne Low Income Standard Income Hiah Income
Municioal 4.25% 5.25% 5.75%
Aoricultural 4.25%
Commercial 5.75%

LOANS LESS THAN 30 YEARS

In May of 1995, the Board adopted a set of reductions in lending rates for loans with maturities
less than 30 years:

For loans with maturities of20 years or less but more than 10 years, the rate was reduced
by one-quarter of one percent below the 3D-year rate for that category of lending.

For loans with maturities of 10 years or less, the lending rate was reduced by one-half of
one percent below the 3D-year rate for that category.