Meritage Homes CORP 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our fixed rate debt is made up primarily of $1.0 billion of our senior notes. Except in limited circumstances, we do not have an obligation to prepay our fixed-rate debt prior to maturity and, as a result, interest rate risk and changes in fair value should not have a significant impact on our fixed rate borrowings until we would be required to repay such debt. Our Credit Facility is subject to interest rate changes. We had no borrowings or repayments under the Credit Facility during the year ended December 31, 2023, and had $40.0 million in borrowings and repayments under the Credit Facility during the year ended December 31, 2022. We had no borrowings or repayments under the Credit Facility during the year ended December 31, 2021. We had no outstanding borrowings as of either December 31, 2023 or 2022. There were no interest charges resulting from intraperiod borrowings during the year ended December 31, 2023. Interest charges resulting from the intraperiod borrowings during the year ended December 31, 2022 were not material, and there were no interest charges resulting from intraperiod borrowings during the year ended December 31, 2021. The following table presents our long-term debt obligations, principal cash flows by maturity, weighted average interest rates and estimated fair market value for the year ended December 31, 2023 (in millions): Fair Value at December 31, 2024 2025 2026 2027 2028 Thereafter Total 2023 Senior Notes Fixed rate (a) $ — $ 250.0 $ — $ 300.0 $ — $ 450.0 $ 1,000.0 $ 956.6 Weighted average interest rate n/a 6.000 % n/a 5.125 % n/a 3.875 % 4.781 % n/a Loans Payable and Other Borrowings Fixed rate $ 10.2 $ 2.0 $ 0.7 $ 0.6 $ — $ — $ 13.5 $ 13.5 Average interest rate 1.188 % 1.365 % 3.803 % 4.000 % n/a n/a 1.492 % n/a (a) Fair value of our fixed rate senior notes at December 31, 2023, is derived from quoted market prices by independent dealers. Our operations are interest rate sensitive. As overall housing demand is adversely affected by increases in interest rates, a significant increase in mortgage interest rates may negatively affect the ability of homebuyers to secure adequate financing or cause potential homebuyers with existing mortgages to choose to stay in their lower interest rate homes. Higher interest rates and/or rapidly increasing interest rates could adversely affect our revenue, gross margins, earnings, and cancellations rates and would also increase our variable rate borrowing costs on our Credit Facility. We do not enter into, or intend to enter into, derivative interest rate swap financial instruments for trading or speculative purposes.