The Declared Rate for determining high-interest/high-point home loans in Vermont will be four percent in 2023. Vermont law requires lenders to provide high rate disclosures on any loan with an interest rate that exceeds the Declared Rate by more than three percent and/or for which the lender charges more than four points. In other words, any residential loan with an interest rate greater than seven percent is considered a high rate loan in Vermont. The new rate goes into effect January 1, 2023.

The Declared Rate varies annually in line with the interest rate that the Vermont Department of Taxes sets for overpayment and underpayment of taxes. Under 32 V.S.A. § 3108, the Commissioner of the Department of Taxes sets the interest rate by rounding up to the nearest quarter percentage from the average prime loan rate charged by banks during the 12-month period ending October 31 each year. That rate, as determined by the Board of Governors of the Federal Reserve System, was 3.96 percent, so the Commissioner has set Vermont’s rate for interest that accrues during calendar year 2023 at 4.0. This represents a 0.75 percent increase from the rate for 2022, and a return to 2021’s rate.

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