 Rental equipment problems! what would you do? |
| i rented a man-lift from a company i told the guy what i needed it for he recommended this certain lift. they assured me that it worked!! got to the job site and it would not work, and on top of ... |
|
 Refinancing home, Who is best mortgage company? |
| Some people say to go with Countrywide,has anyone used them. I live in Ohio.... |
|
 Mortgage Company.....? |
Im looking for a good mortgage company to refinance my home....owe 95k and looking to get a loan for 100k with a low payment, better interest (now at 6.125%)....
what company you all preferr?
... |
|
 Do apartments have to be able to get wheelchair into front doors? |
| when my daughter rented the apartment the landlord knew she was blind with other disabilities, since then she has fallen and broke her kneecap and is now in a wheelchair. The doorway has the standard ... |
|
 I just bought a house...? |
| Well last week I bought new home for my family, we all really loved the house. I spent today getting to know the new neighbors, and it came to my attention that the previous owners of the house I ... |
|
 What are the dangers to renting to tenants without a lease? |
| have a tenant that doesn't want to sign a new lease now that his is expired, and I don't know how to go on from here.... |
|
 What should I do now since my landlord won't take my phone calls? |
| Well, my girlfriend has been calling my landlord for the past couple of weeks and getting no response. Since I started leasing I have had a few complaints and it takes many calls before I get any ... |
|
 Don't Want to lose my house.? |
| I am a dilemma right now. My husband & I had a mortgage company we liked very much until they sold our loan to a very well known company, we fell behind on our mortgage payment 2 month. We have ... |
|
 Do the "get a $300,000 loan for 990 a month" really exist? |
| If you know someone or by experience let me know, 10 pts!... |
|
 Can I talk my apartment leasing agents to lower my rent? |
| I moved in in mid-may for an agreed price of 699.00 monthly and I was okay with that at the time. Someone moved in below me recently, exact same apartment, everything all the same. Yet his rent is ... |
|
 Is a down payment required at closing on a 100% home purchase loan? |
| Wouldn't the down payment represent the portion of the purchase price not covered by the loan?... |
|
 Landlord is selling our house but we don't want to move! What can we do? |
| My husband and I just found out that when our lease is up at the end of August our landlord is selling our house. It's not even on the market yet though. We love the house and we really don'... |
|
| Should i go or should i stay put and let my landlord take me to court? |
| Advise wanted please,. Due to the failer of my landlord not carrying out vital repairs in the flat i rent from him. Which are causing me serious health problems... I have been to cab and my council.... |
|
 Can my landlord evict me for really no reason? |
| I live in Ventura County. my landlord just informed my roommates and i through text message that she was evicting us b/c she cannot rent out her extra bedroom, which i guess is costing her an extra 60... |
|
 Do landlords have a right to tell you how to pay your rent? |
| I'm wondering, in the UK for a house of multiple occupancy with an assured short hold tenancy agreement does the landlord have the right to dictate how the tenants pay rent? I.e. can he ... |
|
 How long does a home refiance take? |
| how long does a refiance on a home usually ... |
|
 Refinacing a new home purchase? |
| I recently purchase a a 2 unit building. My low credit score resulted in high interest rates. Score then was 623. My score is 664 now. Can i refinance to lower my payment. And does it cost anything ... |
|
|  |
Jason | Why would a Savings Institution prefer to lend borrower at fixed-rate instead of adjustable-rate? |
Savings Institution bears less interest rate risk if they lend money at fixed-rate, but some institutions prefers adjustable-rate, why?
Additional Details
What if the market has upward-sloping yield curve? What are the reasons that Savings Institutions want to lend money at fixed-rate? |
 |
 
Yanswersmonitorsarenazis
 |
Assuming you're talking about mortgages, the banks don't hold the actual debt anyway. They sell the loan to Fannie Mae or Freddie Mac or other outlet. Fannie then creates bonds, which are sold to bond investors on Wall Street.
So it's the bondholders that ultimately absorb the interest rate risks.
A typical scenario: You get a mortgage for 6.00% from Bank X. You continue making your payments to Bank X. However, Bank X is only receiving a servicing fee, usually about .25% per year. The underlying debt has been sold to Fannie Mae.
So, Fannie Mae is getting 5.75% of that money, after paying the servicing fee to Bank X. Fannie Mae will keep some amount, let's call it .75%. Which may be close to reality, because often Fannie will guarantee certain paybacks on their bonds. They create a bond, with a pool of their loans, that pays 5.00%.
Grandma Gertrude wants a safe place to invest her money. She goes out and buys the bond. She's the one at risk of having the investment devalued by inflation and interest rate climbs, and early payoffs and defaults. Which is why bonds are so often sold in mutual fund pools, so you're only buying a fractional piece of any single debt. And the circle of money is now complete, in that the bank has all that money to lend again, and still earns a residual income from the original loan they created.
I think you'll find that, at least historically, banks can't hold long-term fixed paper in their own portfolios, at least they're limited in that ability. Time was that small banks could only offer 5 year ARMs or balloons if they wanted to hold the note in entirety. It's possible some regulations have been loosened on that, but I think mostly it's still the case.
A bank that prefers adjustable rates is likely holding those loans directly in their portfolios, or is attempting to increase their holdings, but to do so, they need to remove their own rate risk and put that risk on the borrower instead. |
|
IT Pro
 |
When rates are headed down, then places like to lend at a fixed rate. If rates are headed up, they'd prefer to lend at adjustable rate. That maximizes their profits. |
|
cliff_dweller
|
Long term people who have adjustable rate loans go into default and get foreclosed on more than a standard 30-year or 15 year loan. They usually wind up losing money in the long run on them. |
|
Culture Warrior
 |
In some cases, fixed rates are offered if they are considered short term. 5 years or less.
Almost all commercial loans are done on an adjustable basis. This allows fluctuations in Treasuries and will reprice the loan accordingly.
If you are refrring to personal loans, most of the time they are to small to worry about adjusting them. |
|
Biz Guru
|
They do fixed rate when their research suggests that the average rate over your term will be lower that the one they offer. |
|
whatevit
|
Financial institutions, make money by borrowing money. If the Prime is 4% and I loan to you at 8%, all is well and I make money without spending any of my own. If Prime go to 6%, I have to cut my cost of operation by 50% or I will loose my shirt. This will not happen if your loan is adjustable, I just pass the added cost to you. |
|
lizzgeorge
|
Banks like to have a mix because even they cannot predict what will happen with interest rates. Fixed rates can be good if rates fall--or bad if rates rise. Since many loans last for years and years, sometimes the bank may be in a favorable position and sometimes they aren't. They make sure it balances out by raising or lowering the rate they're willing to fix at. Or by making more or fewer fixed rate loans. |
|
Ken
 |
Your explanation seems different than your question. In any case, though, institutions often prefer an adjustable rate mortgages because they can raise rates dramatically later. But often, lately, they are raising rates and borrowers are finding themselves in over their heads, so they let it go to foreclosure. This is bad news for the institutions, and many are offering fixed rates so borrowers know what to expect and thus there are fewer foreclosures. |
|
joniannuzzi
 |
if you have a fixed you are less likly to refi if you have an adjustable you most definatly refi at the adjustment due date |
|
| |
|
| | |
| Questions List |
Answers | Last Post
| | | |
9 | 14 minutes(s) ago
| | | |
9 | 52 minutes(s) ago
| | | |
9 | 3 hour(s) ago
| | | |
9 | 8 hour(s) ago
| | | |
9 | 1 day(s) ago
| | | |
9 | 6 day(s) ago
| | | |
9 | 1 week(s) ago
| | | |
9 | 2 week(s) ago
| | | |
9 | 2 month(s) ago
| | | |
9 | 4 month(s) ago
| |
|
Homepage 
Financial
Forum 
Renting & Real Estate 
No Spam
Adult 
Gambling
Unfinished
Deception
Plagiarism
Not English
