banks had 30 years loan to home owner for interest rate of 3.0 o

banks had 30 years loan to home owner for an interest rate of 3.0 or 3.5 which they made a couple of years back. Now that the interest rate is going up, let's say for a reasonable rate, you go to bank to do a time deposit for 2 years or 5 years, like in the 90s, you can easily get an annual rate between 3percent to 5 percent for these time deposit. So how can the bank make the money, let's say 3 years or 4 years from now if the interest rate keep going up.

This conclude the following two things:

1): All of these banks will go underwater if interest rate going up.

2): Interest rate will never go up a lot again because of these 30 years loan. ( lower interest rate is like another way of inflation, you simply cannot go back)

 

 

所有跟帖： 

• Can I ask a question? If Fed raise interest rate to 3% -半斤_八两- ♂ (152 bytes) () 11/26/2016 postreply 08:53:08

• 不需要更不可能,我们的钱都是老绝户了,靠银行存款利息是梦想。 -_学无止境- ♂ (0 bytes) () 11/26/2016 postreply 09:37:11

• I am just wondering how Fed interest rate hike... -半斤_八两- ♂ (92 bytes) () 11/26/2016 postreply 09:44:26

• Bank use short term deposit to do long time loan -funnyornot- ♀ (0 bytes) () 11/26/2016 postreply 09:50:41

• OK, I got. Thanks. Banks may pay you close to 3%... -半斤_八两- ♂ (50 bytes) () 11/26/2016 postreply 10:03:27

• Banks sell these mortgages as MBS, they are not holding it. -wujiandao- ♀ (0 bytes) () 11/26/2016 postreply 13:02:51

• Not always though, they do hold some also have to buy back these -Soltek- ♂ (0 bytes) () 11/26/2016 postreply 18:19:38