An institution that originates and holds a fixed-rate mortgage is adversely affected by ____ interest rates; the borrower who was provided the mortgage is adversely affected by ____ interest rates.

Question

Quizplus · Accepted Answer

An institution that holds a fixed-rate mortgage loses potential interest income when market rates increase, as it is locked into the lower rate. Conversely, a borrower with a fixed-rate mortgage is adversely affected when rates decrease, as they are unable to take advantage of the lower rates without refinancing.

An Institution That Originates and Holds a Fixed-Rate Mortgage Is