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Investopedia explains 'Blended Rate'
1. Banks use a blended rate to retain customers and increase loan amounts to proven, creditworthy clients. For example, if a customer currently holds a 7% interest, $75,000 mortgage and wishes to refinance, and the current rate is 9%, the bank might offer a blended rate of 8%. The borrower could then decide to refinance for $145,000 with a blended rate of 8%. He or she would still pay 7% on the initial $75,000, but only 8% on the additional $70,000.
2. The blended rate is used in cost-of-funds accounting to quantify liabilities or investment income on a balance sheet. For example, if a company had two loans, one for $1,000 at 5% and the other for $3,000 at 6% and paid the interest off every month, the $1,000 loan would charge $50 after one year and the $3,000 loan would charge $180. The blended rate would therefore be (50+180)/4000 or 5.75%
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