NASHVILLE, Tenn. (WZTV) — A controversial bill making its way through the Tennessee Senate could significantly change how interest rates are determined for home loans. Senate Bill 749 proposes a new system where rates would be set at 4% above the state average, potentially pushing them well past current levels.
Currently, the interest rate for home loans is 7.5%, determined by auction or bond yields. If the bill passes, rates could surge as high as 11.5%, raising concerns among home buyers and real estate experts.
Conflicting Interpretations of the Bill
Senator Ken Yager, who is sponsoring the bill, insists it will not impact traditional home loans.
“This bill would not affect that at all,” Yager said. “This bill only affects people who already have a mortgage on their home but are taking a second mortgage on the home. Generally, that first mortgage would probably be their home loan, so it would not affect the Home Loan Mortgage market.”
However, language in the bill explicitly includes home loans, raising concerns among lawmakers and real estate professionals. Some Democratic legislators have voiced strong opposition, arguing that the bill will make homeownership even more difficult for families already struggling with rising costs.
Impact on Home Buyers
Realtors warn that such a sharp increase in interest rates could have severe consequences for the housing market. Keith Yates, a real estate broker with Red Realty, expressed his concerns.
“A mortgage rate increase going from eight and a half to 11 and a half, approximately, would be devastating to a buyer,” Yates said. “It’s simply not going to make homeownership affordable at all.”
Despite these concerns, Senator Yager believes the changes could benefit consumers.
“It will make them more competitive,” Yager argued. “I’m reluctant to say the word easier, but there will be a greater market and more choice and more availability of these loans for consumers.”
Political Pushback
The Tennessee Senate Democratic Caucus strongly opposes the bill, stating that it will make homeownership even more unattainable.
“Tennessee families are already struggling to afford a home, and Republicans are making it worse,” said Senate Democratic Caucus spokesperson Brandon Puttbrese. “It will push homeownership further out of reach and drive families deeper into debt.”
As the debate over Senate Bill 749 continues, homeowners and prospective buyers across the state are keeping a close eye on the potential impact. The bill is set to be discussed further in the coming weeks.
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