Under which condition would a loan's interest rate be considered a higher-priced mortgage loan?

A loan's interest rate is categorized as a higher-priced mortgage loan when it exceeds the average prime offer rate (APOR) by more than 3.5%. This designation is significant as it affects the regulatory requirements and protections for borrowers, as higher-priced loans may entail additional risks for both the lender and the borrower. The APOR serves as a benchmark for understanding the general market rates and ensuring that borrowers can compare their loan offers against prevailing standards.

Interest rates that exceed this threshold indicate a higher risk of default, which may compel lenders to implement stricter underwriting standards or provide additional disclosures to inform borrowers of the implications of the higher rates.

The other conditions listed do not directly correlate with the classification of a loan as higher-priced in the same manner. For instance, a loan's term being longer than 30 years or being secured by a secondary dwelling does not inherently impact its pricing relative to the APOR. Additionally, having a fixed rate below 4% would not qualify the loan as higher-priced, as it suggests a more favorable interest rate environment rather than a higher priced scenario.