What does the interest rate mean?

Interest Rates

The interest rate is the percentage at which loan payments are made to Lend. Lend offers adjustable interest-only loans at SOFR + 3.5% and is subject to change in accordance with the SOFR and base rate (3.5%).

What is SOFR?

SOFR, or Secured Overnight Financing Rate, is a benchmark interest rate that represents the cost of short-term borrowing with U.S. Treasury securities as collateral, essentially an overnight rate.

This rate is significant in the financial world as it's used to determine prices for various financial instruments, including derivatives, loans, and mortgages.

Let's break down the different interest rates we feature in the app:

  1. Current Rate: This is today's combined rate. It's derived from the 30-day SOFR (Secured Overnight Financing Rate) added to Landa's base rate.
  2. Interest Rate: The average rate from all the loan payments this month. This combined rate represents the blended rate used to calculate this month's dividends.
  3. Property Loan Rate: This rate combines the base rate and the 30-day SOFR by individual property. The base rate has historically been 2%, but is currently 3.5%. The property loan rate varies based on the origination date of the property loan.

Please note the interest rate does not reflect performance or the return of Lend.