How can a depository go wrong on this mathematical equation: Originate jumbo balloon loans at 4% and fund them with deposits that cost (say) 75 basis points. It’s seven-year paper. The profit margins are nothing short of huge. The borrowers (hopefully) are well heeled ‘rich folk’ with equity or sizeable downpayments. The only thing you have to worry about is a spike in short-term rates (highly unlikely) or that banking regulators might crack down on balloon mortgages (which is possible.) So, when will this jumbo ‘Carry Trade’ nirvana end? Answer: If I were that smart I’d be trading jumbo MBS for a living.
How Long Will the Jumbo Carry Trade Last?
NOV 19, 2012 12:21pm ET
You must be registered to post a comment. Click here to register.
Already registered? Log in here
- Simplifile Integrates Collaboration, Post Closing Services with LendingQB
- Freedom Mortgage Wholesale Division Now Using Simplifile Collaboration Service
- Ellie Mae® Selects DataVerify® Risk Mitigation System for Its Total Quality Loan Program
- Four New Counties Adopt Simplifile as Wyoming Authorizes E-recording Statewide
- FIRST AMERICAN MORTGAGE SOLUTIONS INTEGRATES FRAUDGUARD WITH LOANLOGICS LOANHD PLATFORM