Why do depository institutions prefer to make variable rate loans instead of fixed rate loans?

Apr 15, 2010 by Shena | Posted in Other - Business & Finance

What kind of borrowers do you think would prefer variable rate to fixed rate loans?

A higher proportion of variable rate loans tend to be made when all interest rates are higher than normal. Why might this be the case?

Banks will maximize profits any way they can. An adjustable rate means they will always make the same maximum profit from a loan, no matter what the Federal interest rates do.
Borrowers who prefer variable rates tend to be bad with money and easily

Vic J | Apr 15, 2010

Banks will maximize profits any way they can. An adjustable rate means they will always make the same maximum profit from a loan, no matter what the Federal interest rates do.
Borrowers who prefer variable rates tend to be bad with money and easily
Vic J | Apr 15, 2010

Increase in short-term interest rates effect on fixed rate loans?

Nov 12, 2008 by ldbmom1 | Posted in Other - Business & Finance

When would a bank that has multi year fixed rate loans that are financed by short term deposit liabilities be vulnerable to an increase in short term interest rates?

When? Continuously. That is how the system works. When a bank needs to offer higher rates to depositors to attract deposits, it will raise the rates it charges for its fixed-rate products. And when its short-term borrowing costs are forced upwards

curtisports2 | Nov 12, 2008

How to make a Fixed Rate Loan/Mortgage Calculator in Excel

www.TeachMsOffice.com This video tutorial will show you how to make a fixed rate loan or mortgage calculator in excel. It is actually quite easy ...

Obama to visit CU, discuss student loan interest rates

18.05.12

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WASHINGTON - President Barack Obama will discuss student loan interest rates during a visit to the University of Colorado in Boulder this Tuesday, the White House says.

Obama will urge Congress to prevent the fixed interest rate on Stafford subsidized loans - held by nearly 8 million low- and middle-income undergraduates - from doubling on July 1. It is scheduled to go from 3.4 percent to 6.8 percent unless Congress intervenes.

Obama has asked Congress to block the rate hike for current and future Stafford loan recipients. His fiscal 2013 budget would keep the rate at 3.4 percent for a year.

Source: 9NEWS.com

fixed rate loans - Bookshelf


Getting Started in Real Estate Investing
354 pages 		Getting Started in Real Estate Investing

Creator: Michael C. Thomsett | Business & Economics - 2009-04-27
loan or replace it with a new loan from another lender. Fixed-Rate and Adjustable-Rate Loans Real estate mortgages ... Fixed-Rate Loans With a fixed- rate mortgage (FRM), the interest rate is permanently fixed as part of the contract.
Publisher: John Wiley & Sons Inc
Home Buying for Dummies
408 pages 		Home Buying for Dummies

Creator: Eric Tyson, Ray Brown | Business & Economics - 2009-05-11
During periods when little difference exists between short-term and long-term interest rates, the interestrate savings with a hybrid or regular adjustable ( versus a fixed-rate loan) are minimal (less than 1 percent).
Publisher: For Dummies
Financial Derivatives
428 pages 		Financial Derivatives

Creator: Kumar | 2007-08-01
Converting a Fixed Rate Loan to Floating Rate Loan Just as we can convert a floating rate liability into a fixed rate liability, we can as well do the reverse, ie, convert a fixed rate loan into a floating rate loan.
Publisher: PHI Learning Pvt. Ltd.

Fixed rate break fee calculation exemption amended

by Langes.com.au

The National Consumer Credit Protection Amendment Regulations 2011 (No. 3) amend the Subregulation 79A(3)(c) definition of break fee inserted by the National Consumer Credit Protection Amendment Regulations 2011 (No.2) (the exit fee regulations) by removing the prescription of the method of calculation of the break fee.

Under Reg 79A(2)(a)(i) of the exit fee regulations, break fees on fixed rate loans are exempt from the prohibition on exit fees on new home loans which commences on 1 July 2011.

...

Read more...

fixed rate loans - News


Are we facing the end of the 30-year fixed-rate mortgage?
Los Angeles Times - May 15, 2011
Are we facing the end of the 30-year fixed-rate mortgage? With the demise of Fannie Mae and Freddie Mac, some housing interests fear the passing of the 30-year fixed-rate loan. (Francine Orr, / May 15, 2011) By Lew Sichelman Will the move to dismantle Fannie Mae and Freddie Mac mean the end

Mortgage Rates Today May 15, 2011: Don't Worry, 30 Year Fixed Rate Mortgages ...
MonitorBankRates.com - May 15, 2011
30 year fixed rate mortgages are still the preferred home loan for most homes buyers and always will be. (continued below) I just read that many "housing proponents" say 30 year mortgage rates will no longer be offered by lenders if the government

Despite risks, adjustable-rate mortgages have their advocates
MiamiHerald.com - May 12, 2011
Despite risks, adjustable-rate mortgages have their advocates Based on recent rates, a $200000 mortgage with an adjustable rate will save the borrower $166 a month compared with a fixed-rate loan, he said. Federal Housing Administration ARMs have an advantage over conventional adjustable loans, Pecci said,

Freddie Mac: Mortgage rates fall for 4th straight week
Bizjournals.com - May 13, 2011
Freddie Mac: Mortgage rates fall for 4th straight week Long-term mortgage rates have fallen for the fourth consecutive week, with the average rate on a 30-year fixed-rate loan at its lowest level since December 2010. A 30-year fixed-rate mortgage averaged 4.63 percent this week, down from 4.71 percent last

Interest rate hike? How to prevent loan EMI from spinning out of control
Economic Times - May 18, 1958
You could bring down your loan tenure without raising the EMI if you make a prepayment. This is not always an option because not everybody has that kind of liquidity. Consider liquidating low-yield investments, such as fixed deposits and debt funds,

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