You are considering an ARM with the following characteristics:

Mortgage amount $=$ $$150,000\mathrm{.}00$

$2/6$ Interest rate caps

Margin $=2\mathrm{.}5$

Index $=1$ year TB yield

Term $=30$ years

One$-$year adjustable

Monthly Payments

Discount points $=2$

Initial Teaser Rate $=5\%$

Prepayment penalty $=1\%$ for the first three years

All subsequent adjustments are made from the Teaser Rate

The TB yield was $4\mathrm{.}75\%$ at the outset of the loan, and the TB yield was $5\mathrm{.}25\%$ at the end of year one. Suppose that, at the end of year two, the index is $4\%$ and stays constant for the remaining life of the loan. What is the APR on the loan?