blended rate

Definition

An averaged interest rate combining multiple loans or tranches of debt, making your actual cost of borrowing sound better than it is. Financial smoothie blending various percentages into one palatable number.

Example Usage

Their blended rate of 4.5% sounded reasonable until they realized it included a first mortgage at 3.5% and a second at 7%, weighted very unfavorably.

Origin

Financial terminology applied to complex loan structures

Fun Fact

Blended rates are mathematically accurate but psychologically misleading, which is precisely why they're popular in marketing materials.

Source: Mortgage and commercial lending terminology

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