In general, banks dont “borrow short term and lend long term”
it’s a recipe for disaster. Banks have 5 yr CD’s but not 15/30yr CD’s. They may have a dept that hedges 30yr bonds, but why should they take the risk of a default IF they can sell it off to Fannie/Freddie and put the taxpayer at risk. Davej is probably better qualified to explain the backend.
BofA has warehouse lines but perhaps they buy 15/30yr MBS as well. Who in their right mind wants to loan money for 15yrs below 4% (or for 30yrs slightly higher) it’s artificial govt stimulus.
If/when rates go up the cash value of bonds being held drops. The risk to any bondholder. Hopefully you get your rate if held to maturity otherwise you need to take a loss of principal to liquidate.
Insurance companies, pension funds may have to settle for these returns, the Fed is squeezing hard. Retired seniors who rely on interest income are suffering terribly.
APR is a terrible way to shop, diff people figure the APR differently.
Govt intervention HAS made things worse, not better. Reagan said it best, the govt is the problem, not the solution.
I’m the one that said foreclosure is the solution, not the problem. 😉 HLS
