Which term describes a loan with an annual percentage rate significantly higher than the average market rate?

The term that accurately describes a loan with an annual percentage rate significantly higher than the average market rate is a High-Cost Mortgage. This classification is particularly important in lending practices as it helps to identify loans that may carry higher costs for borrowers.

In the context of the New Jersey Residential Mortgage Lending Act, a High-Cost Mortgage is regulated to provide greater consumer protection. This type of loan often comes with certain characteristics, such as higher interest rates and additional fees, which can lead to financial strain for borrowers if not understood properly. By identifying these loans, borrowers can be more informed about the potential risks and costs associated with high-interest borrowing.

On the other hand, terms like Standard Mortgage, Subprime Mortgage, and Conventional Mortgage describe other categories of loans. A Standard Mortgage generally reflects typical loan features and rates, while a Subprime Mortgage is aimed at borrowers with lower credit scores but does not inherently imply a rate significantly higher than market averages. A Conventional Mortgage is often conforming to general lending guidelines without indicates about high costs. Each of these options, while relevant in different contexts, does not specifically highlight the problematic pricing associated with high-cost loans in the same way that a High-Cost Mortgage does.