The par rate is the interest rate where a lender will offer a loan with neither a lender credit (yield spread premium) nor require discount points paid by the borrower.

When pricing a loan, a mortgage lender may offer an interest rate of 5.25% with a $3000 credit to the borrower, a 5.0% interest with no points or 4.75% with the payment of one discount point (1%). In this example, the 5.0% interest rate is the “par rate.”