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?

1. 4.01%

2. 4.56%

3. 3.43%

4. 3.80%

5. 3.98%