According to paragraph 3, Article 21 of the Housing Act No. 44/1998, including later amendments and Article 14 of Regulation No. 522/2004, on HFF mortgages and bonds, the Board of the Housing Financing Fund has the authority to determine the interest rates on HFF loans based on financing cost from regular auctions of HFF bonds on the one hand and on the weighted average financing cost of prepaid loans on the other, in addition to an interest premium.
HFF's interest rate decision is based on the yield at the HFF bond auction held on September 30th in addition to the weighted financing cost of prepayments on HFF loans. The weighted interest rate for the auction and prepaid HFF loans is 3.54%.
The interest rate premium for operations is 0.45%, the credit risk premium 0.45% and the prepayment risk premium 0.50%.
As a result of the auction and the change in premium, the HFF has decided to leave interest rates on housing loans including a prepayment clause unchanged at 4.40% and 4.90% on loans excluding such a clause. This decision takes effect today, September 3nd 2011.