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<br />. <br /> <br />. <br /> <br />. <br /> <br />Existing CWCB Interest Rate Policy <br /> <br />Each year the board sets a standard 3D-year lending rate for Construction Fund <br />loans that are to be recommended to the General Assembly. <br /> <br />From 1973 to 1992, the board charged a fixed "service charge" of up to 5 percent to <br />borrowers. These loans typically extended over 4D years. In 1992, the General Assembly <br />authorized the board to charge interest at a rate between zero and 7-percent. In May 1993, <br />the board adopted guidelines for setting the interest rate for a "standard" 30-year loan at 2 <br />percent (200 "basis points") less than the average yield for 30-year U.S. Treasury Bonds <br />for the preceding 12 months. <br /> <br />Lending rates are established for municipal, agricultural, and commercial projects. <br />For municipal projects, lending rates are established for low, medium, and high income <br />service areas based on median household income in the project sponsor's service area. <br />Lending rates for agricultural projects are identical to municipal low income rates. <br />Lending rates for commercial projects are higher than for the other categories. <br /> <br />For municipal low income areas, where median household income (MHI) is less <br />than 80-percent of the statewide MHI, the lending rate will be 20-percent below the <br />standard rate. For municipal medium income areas, where MHI is between 80 and 110- <br />percent of the statewide MHI, the lending rate will be the standard rate. For municipal <br />high income areas, where the MHI is more than 11 O-percent of the statewide MHI, the <br />lending rate will be 10-percent above the standard rate. <br /> <br />For loans with maturities of 20 years or less, but more than 10 years, the rate may <br />be reduced by one quarter of one percent below the 30-year rate for that category of <br />lending. For loans with maturities of 10 years or less, the lending rate may be reduced by <br />one half of one percent below the 30-year rate for that category. <br /> <br />In November 1997, the board changed the rate setting procedure to be based on the <br />average yield for the 30-year "A" Municipal Bond for the preceding 12 months. The board <br />adopted the following interest rates for standard loans recommended to the General <br />Assembly in the respective years of the table. <br /> <br />CWCB 30-Year Lending Rates <br /> <br />rTf\I,t!I..,fiTI,CH"ijTI I' -.F. -;;''5: r - 'iff;~ ;,'!f!':'f " I-,rffr~ :10iF .. ~ ," tfffffI)-:1 <br /> , <br />, , , <br /> <br />Agricultural 5.00% 4.00% 4.25% 3.75% 4.00% 3.75% <br />Municipal- Low 5.00% 4.00% 4.25% 3.75% 4.00% 3.75% <br />Municipal- Middle 5.00% 5.00% 5.25% 4.75% 5.00% 4.75% <br />Municipal- High 5.00% 5.50% 5.75% 5.25% 5.75% 5.25% <br />Commercial 5.00% 5.50% 5.75% 5.25% 6.25% 5.75% <br />