(2) The department shall periodically, during the term of a home or farm loan with a variable interest rate, prescribe the interest rate to be paid by an applicant, taking into consideration the current value of the money, the solvency of the loan program and the effect of the rate on veteran applicants.

(3) Except as provided in subsection (4) of this section:

(a) The rate of interest on a loan granted on or after May 27, 1971, and originally set at five and nine-tenths percent per annum may not be increased to more than seven and nine-tenths percent per annum.

(b) The rate of interest on a loan granted on or after January 1, 1981, and originally set at seven and two-tenths percent per annum may not be increased to more than nine and two-tenths percent per annum.

(4) The department may prescribe the interest rate to be paid by an applicant at a rate greater than the rates described in subsection (3) of this section, but only if the department determines, at the sole discretion of the department, that such action is necessary to avoid invoking the provisions of Article XI-A, section 4, of the Oregon Constitution.

(5) When, during two consecutive fiscal years, the cash flow projection and the review of the projection performed under ORS 407.185 indicate that the Oregon War Veterans’ Bond Sinking Account will maintain a balance throughout the term of the projections that exceeds the succeeding years’ debt service and operating expenses for the loan program, the department shall prepare a program for reducing the interest rates charged under this section in such a manner as to ensure the future solvency and self-supporting nature of the loan program. However, no reduction in interest rates shall occur if the variable rate debt, if converted to a fixed rate, requires retention of the amounts in order to meet projections.

(6) Notwithstanding the rate prescribed for acquisition of a home as provided in subsections (1) to (5) of this section, the department may periodically establish separate and distinct interest rates for home improvement loans granted before January 1, 2020. [Formerly 407.072; 1985 c.296 §6; 1987 c.221 §7; 1989 c.171 §48; 1989 c.728 §4; 1997 c.214 §4; 2005 c.625 §36; 2019 c.223 §14]