FM for Actuaries

Table 5.5:
Summary of reference rates in selected countries
Country Name of reference rate Equivalent to Remarks
Australia Comparison Rate APR, taking into account all
interest and most fees and
charges
Canada
Actual Interest Rate (AIR)
Annual Percentage Rate (APR)
APR = r (m)
Fees and charges include government fees,
charges and duties. Early exit fees or early termination
costs are not included in the Comparison
Rate calculation. The Comparison Rate is higher
than the APR.
AIR is the annual interest rate used to calculate
the monthly payments. APR includes both the interest
and any additional costs or prepaid finance
charges, mortgage insurance, closing fees.
Hong Kong Annual Percentage Rate (APR) APR = r (m) APR should include interest on loans as well as
any other fees and charges to reflect the total cost
of credit. However, institutions are not obliged to
quote the APR. Nonetheless, they should show all
fees and charges related to the product in a clear
and prominent manner.
Singapore Effective Interest Rate (EIR) EIR = r (m) Fees and early exit charges are not taken into account.
UK Annual Percentage Rate (APR) APR = r (m) Takes account of other charges such as arrangement
fees.
US
Annual Percentage Rate (APR)
Annual Percentage Yield (APY)
APR = r (m)
APY = i
Takes account of application fee, closing fee and
title fee, etc.
Loans and Costs of Borrowing 171