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Erwin and Eleni have an outstanding mortgage balance of $175,000. They have 14 months remaining on their mortgage at a fixed-rate of 4.5% compounded semi-annually

Erwin and Eleni have an outstanding mortgage balance of $175,000. They have 14 months remaining on their mortgage at a fixed-rate of 4.5% compounded semi-annually on their five-year (60 month) mortgage term. The current five-year fixed rate of interest for a mortgage is 3.1%, compounded semi-annually. They would like to "blend and extend" their existing mortgage for another five-year term. 



What rate would they be charged under a blend-and-extend option?

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