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Clarke Co, Iowa | Bank failures soon well be the norm. 30-year mortgages at 2.95 do not work when the fed ups the interest rate. Financial institutions get all their money to lend short term (less than 2-years). That has all worked fine as long as interest rates did not change. For a long-time, short-term deposits paid tenths of a percent and even 2-year CDs were under 2%. Now suddenly checking accounts pay 3% on balances and CDs are going over 5%. Suddenly every financial institution be it a bank, Fedi May, Fedi Mac, or credit union are all finding their cost of money is greater than there return on the older long term fixed interest rate loans. Even worse than the loans are the supposed safe bet on 30-year T-bills. T-bills are nothing more than interest only loan to the government.
Banks are going to be looking for any excuse to rewrite fixed rate loans and mortgages. You want to buy something OK they well rewrite and combine all your loans at a new rate. | |
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